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ECONOMICS AS THE BASIS 



A STUDY IN SCIENTIFIC SOCIAL PHILOSOPHY 



BY 
JOHN G. MURDOCH, A. M. 

Former Mental Science Fellow, Princeton 
Professor of the English Language, Rensselaer Polytechnic Institute 



ALLEN BOOK AND PRINTING COMPANY 

TROY, NEW YORK 

1913 



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^^^.K"^ 



COPYMGHT 1913 
JOHN G. MURDOCH 



All rights reserved, 
mcl»dmg that of translation into foreign languages 
including the Scandinavian 



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)CI.A346435 



To 
The PeopIvE's Forum" of Troy, N. Y. 

AND 

"iThk Forum" of Schenectady, N. Y. 



A few words as to the origin and the drift of this book may 
be desired. 

Some six or eight years ago the writer, amid his bourgeois 
illusions, was caught for the first time by the alluring, the 
compelling quality of the great present-day questions center- 
ing about the socialistic movement. " Half-sick of shadows," 
aesthetic, literary, ethical, he had no wish to be duped by 
another will-o'-the-wisp, or to retraverse the phantoms of 
Plato's cave man. Gingerly at first, " letting I dare not wait 
upon I would," he at length found himself involved more and 
more. Finally he put forth, as strongly as he was able, into 
the theoretical confusion. Abandoning inferior guides he 
sought out the higher leaders. He therefore went to Marx, 
Engels, Kautsky, to Boehm-Bawerk, Mill, Clark, Fisher, 
Marshall, Hadley, Fetter and the like. After having absorbed 
more or less of poison from Marx, he would apply antidotes 
derived from Fisher or Marshall. Or having mounted with 
Fetter into the thinnish air of psychic values, he would next 
with Engels, Hyndman, or Spargo make a little excursion 
to the edges of the squalid hovels of the poor. Or after 
gliding for a time among- the idealities of a Wordsworth, 
Greene, Caird, Vaughan, or Leo, he would seek refreshment in 
an antiseptic bath from the springs of a Prudhon, Bebel, Bel- 
fort Bax, Dietzgen, Blatchford, or would lull himself a while 
with the words of an "Appeal to Reason." 

The more he found himself inclining to socialistic phi- 
losophy, the more carefully he readvised with Clark, Boehm- 
Bawerk, Hadley and other modern orthodox leaders. The 
attempt was made to treat each guide with utter skepticism, 
to hear a Marx through a Boehm-Bawerk, a Clark through 
an Engels. Essentials were to be distinguished from chaflf. 



Naturally such a course must have thrown up a number of 
questions, seemingly fundamental, which had to be answered 
somehow, if even temporary security were to be obtained. 
Among these questions, some were " purely " economic, some 
" purely " historical, some " purely " ethical, but topping all 
was the great question, the dependence of human social de- 
velopment, especially on the ethical side, upon fundamental 
economic needs. 

This book contains the writer's attempt to answer some of 
the questions which insistently forced themselves upon him. 
A number of his friends found some value for themselves in 
what he had Avritten. He himself, assured that there were 
many others who were putting like questions in a like skep- 
tical attitude, easily made himself believe that these pages 
might be of aid somewhere, even if they express no more than 
a kind of sympathy. Hence in part, the publication of this 
book. 

The chapters were originally prepared, and in part de- 
livered, as lectures to " The People's Forums " of Troy, N. Y., 
and Schenectady, N, Y. They form a continuous discussion 
of the dependence of ethics upon economics from the view- 
point of Marx's conception of history. First comes the Marxian 
idea; next, its application to theories of property and to 
ethics; the ethics of profit and interest lead to a criticism 
of modern economics theory, first on the side of production, 
Prof, Clark being taken as typical; next, on the side of ex- 
change, psychological economics being shown to be largely 
circular; economics are sought in Kant as typical of the 
absolute moralists; finally, a somewhat wider discussion of 
ethics and economic determinism, touching also on other 
outputs of human consciousness. 

Social unrest exists throughout the civilized world ; the 
demand for "social justice" becomes insistent; ancient ideals 
are crumbling ; political parties are disintegrated ; old-line 
leaders are nonplussed; arguments fill the air; the soap box 
has sounding boards as well as the pulpit and the rostrum; 
there is great mental confusion. Much of this confusion arises 
from the fact that the contestants occupy different grounds 

vi 



and wield different weapons. Some will have only statistical 
facts, history, positive knowledge; others know only ideals, 
abstract principles, ethical and religious beliefs, " the teach- 
ings of the fathers." Typically, ethics and economics are 
pitted against each other. The following articles attempt to 
introduce a principle of order into this confusion. 

The lectures and essays assume that the reader will take the 
positivist attitude. The concrete facts of anthropology, psy- 
chology, sociology, biology, history, in short, the subject- 
matter of modern science, must control all theories. Any 
metaphysical or theological principle or dogma is usually pure 
surplusage when in presence of the facts themselves; such 
principles and dogmas are reflections, they are not original 
data. Any reader unable or unwilling to adopt this attitude, 
at least for the time being, may as well lay this book aside 
at this very instant. 

The critical judgments pronounced are intended to be with- 
out personal rancor. The writer himself has lived too long 
amid illusions and through some of them not to know, at least 
faintly, how deeply they penetrate and unconsciously mold 
beliefs and practices. Contradictions not less easily than 
mere incongruities dwell contentedly side by side in even 
a great man's mind. Pride married to humility knows other 
homes than the bosom of the Puritan. If to the reader the 
writer seem at times somewhat too " holy," let the reader 
examine first his own stock of illusions, then look again, or 
at least believe, ' it was not so intended ' ; the criticisms are 
meant to be strictly objective. Pronouncing judgment ac- 
cording to simple tests is not arrogating superiority, least of 
all, moral superiority. 

The writer can not himself tell all the sources of his material. 
Occasionally acknowledgment is made, but he has not taken 
the trouble to mark many of the sources ; his desire is that the 
conclusions rest, not upon " authorities," but upon the reason- 
ing. He claims no originality ; he has plundered wherever he 
found anything he thought available ; if from the dead, 
then no acknowledgment is needed — ' we are all heirs of the 
past ages ' ; if from the living, and any one of these feel him- 

vii 



self ag-grieved, then if he will securely identify his private 
" original " property, the writer will gladly make what repara- 
tion he can ; — otherwise, the claimant is probably a fellow- 
plunderer in respect to this also. 

The thanks of the writer are due to " The People's Forums " 
of Troy and Schenectady ; apart from their continued courtesy 
in requesting lectures, this book had probably never been 
written. A friend, Mr. William Nugent, was in attendance 
upon these articles almost from their very inception ; his deep 
and stimulating criticisms made him their foster-father. Ap- 
preciation is tendered to Mr. Arthur M. Allen for constant 
sympathy and substantial aid in numberless ways. Special 
acknowledgment is hereby made to Professors Willard C. 
Fisher, Charles A. Beard, Henry R. Mussey, and to Mr. Al- 
gernon Lee of the Rand school, who, although utter strangers 
to the writer, with fine magnanimity consented to handle part 
of the manuscript critically; their criticisms led to many 
changes in form, and to slight changes in substance; in no 
particle, are the}^ to be held responsible for the opinions ex- 
pressed in the book. 

Throughout the book, and especially in Chapters VI and 
VII, single quotation marks (' — ') indicate that only the sub- 
stance or a summary of the passages referred to is given. 
Double quotation marks (" — ") indicate that the exact words 
of the passages are used. 

The earnest reader will pardon typographical and other 
slips, of which there are perhaps more than enough. Notice 
of any important errors or flaws (even of the whole book as 
such) will be gladly received. 

Troy, N. Y., April 15th, 1913. 



Vlll 



CONTENTS 

FOREWORD ... 

Chapter. Page. 

I. THE ECONOMIC INTERPRETATION OF HISTORY . I 

Content and extent of historical records, 1. — Theories of his- 
tory, 3. — Economic interpretation of history, 10. — Illustration, 
American history, 14. — Ethical illustration, slavery, 18. — 
Economic determinism and socialism, 19. — Economic de- 
terminism is not the narrow economic, 21. 

II. . . ETHICS AND THEORIES OF PROPERTY ... 24 
Social unrest and property, 24, — Theories of property, 25. — 
Critical principles must be scientific, 29. — The divine sanction 
is unscientific, 31. — "Intuition" is useless, 35. — Ultra-individ- 
ualism is self-contradictory, 41. — Egoism and altruism, 47. — 
Class struggle and class consciousness, 48. 

Ill ETHICS AND PRODUCTIVITY THEORIES OF INTERESTS/ 

Seeming sterility of ethical systems, 57. — Clark's ethical problem, 
60. — Clark's economic problem and solution, 64. — Confusions 
on the economic field, 74. — Confusion of ethical tests, 99. — 
"Institutional robbery" and interest, 107. — Ethical purification 
by "functional distribution," 123. — Clark's ethics relative and 
transitory, 130. 

IV. . . AUSTRIAN-YALE THEORY OF INTEREST. . . 136 

Economics and ethics, 136.— The interest question, 142. — Boehm- 
Bawerk's theory of interest and reasons, 143. — "Natural neces- 
sities" confused, 150. — Boehm-Bavirerk's "reasons" largely a 
product of existing institutions, 160. — History of loan interest, 
170.— Ethical status of interest, 171.— "Cause of interest," 172. 
—Efficient cause of interest, 182.— Ethics of the case, 187. 

V . . . . INTEREST AS EXPLOITATION ... 189 

Interest is real, 189.— Older interest theories. 191.— Meaning of 

ix 



Chapter. Page, 

"socially guaranteed," 199. — Exchange theories of interest, 
204.— "Full pay," 209.— Marginal utility reply, 217.— Criticism 
of final utility, 219. — Values are impersonal, 221. — Values may 
be rationalized, 223. — Subjective values rest upon material 
and psychological necessities, 232. 
VI. ... ECONOMICS IN KANT'S ETHICS . . . .244 

Kant's person and influence, 244. — "Pure reason"; apriorism, 
245. — General critical reply, 247. — The good will acts from 
duty, 253. — Morality rests on maxim of will, 260. — Duty is 
respect for law, 262. — The law is universal, 264. — Transition to 
metaphysic, 271. — Morality presupposes freedom, 281. — "Pure- 
reasou" ethics and real life, 283. — "The Critique of Pure Prac- 
tical Reason," 284. — "God, freedom, and immortality," 285. — 
"Principles of Jurisprudence," 287. — Origin of ethical finali- 
ties, 288. — Subjective and objective worlds, 288. — Sciences are 
groups of kindred facts plus explanatory formulas, 289. — 
Real necessities or dependable regularities confounded with 
formal necessity or consistency, 292. — Knowledge is sense 
data synthesized by experience, 295. — Axioms and postulates, 
297. — Failure of general apriorism, 304. — Kant's ethical apri- 
orism impossible, 305. — Other ethical systems, 307. — Relig- 
ious finalities, 308. 

Vn. . ETHICS AND ECONOMIC DETERMINISM. . . 310 

Culture and external resources, 310. — Precivilized ethics and 
economics, 316. — Economics and justice, 320. — Economics 
and the other virtues, 333. — Source-books for economic deter- 
minism, 335. — How economics become ethics, 337. — Other 
ethical systems, 346. — Economic determinism in other 
modes of consciousness, 350. — Means and ends, 360. — Ideals, 
363. — Definitions of ethics and economic determinism, 368. 



ECONOMICS AS THE BASIS 
OF LIVING ETHICS 



CHAPTER I 

THE ECONOMIC INTERPRETATION OF HISTORY 

Content and Extent of Historical Records. — Theories of Hibtoky: 
Divine (Juidance; Hegel's Evolution of the Absolute Idea; In* 
BTiTUTioNs; CjreatMen; Marx.— Economic Interpretation of Hibtoby: 
Quotation from Marx; Quotation Restated; Books on the Sub- 
ject.— Illubtratkjnh: Declaration of Independence and magna 
Charta; American History In and After the Formation of tub 
Constitution; Colonial Histoky. — Ethh.al Illustration; Slavery.— 
Economic Interpretation of History and Socialism. — ^Economic 
Determinism Co.mplkx; Ideal of Future Society. 

Poets, Utopian dreamers, divines, yes, even philosophers, 
have placed far back in times hoary and remote, a golden 
age of innocence, truth, and general happiness. This airy 
fabric, science has blown away into nothingness. The vice, 
the falsehood, the wretchedness and misery of the present 
hour are not the offspring of so fair and happy a parentage. 
Multitudes of known facts are rendered wholly inexplicable 
to reason on any .such hypothesis of the descent and de- 
generation of man. On the contrary, the record of man is 
the record of his ascent from primeval slime through the 
brute up to the status of the first and highest of all known 
living things. 

From primordial slime to the brute, and then, at some one 
moment in far-off ages, our forefather, our ancestral Adam 
burst the shell of the mere brute, man emerged, hardly 
distinguishable from the other anthropoids surrounding him, 
but still man; at that moment human history began. At 
that moment began the onward, upward march of that tremu- 
lous intelligence crouching for shelter under tree or bush 
or cave, or using them as lurking coverts to snatch with 

1 



2 ETHICS AND ECONOMICS 

stealth or fierce rush his prey, tip to the state of the man of 
this hour, who fronts with open eye and questioning mind, 
the universe of matter and spirit, of space and time, his 
beginning, his end, the beginning and the ending of all things 
else. The record of man's passage from the brute grown 
conscious up to the free self-poised intelligence of to-day, 
his gropings, toils, achievements, passions, and triumphs, his 
losses and gains, his fears, fancies, and beliefs, and how with 
incredible toil and unspeakable sufferings he fashioned his 
thoughts and his desires into laws, morals, religions, institu- 
tions, and states, — this is what we call human history. 

Of this total record, how little remains. Ages and ages 
roll away. Still the offspring of that brute Adam differs 
but little from the beasts competing with him, but the magic 
spark still glimmers, though waveringly. Ages more, the 
spark flickers now brighter now fainter but ever on a higher 
level. Age after age, age after age, hgher levels are attained, 
and so after myriads of years institutions begin to emerge 
whose traces remain visible even to-day. In a groping, dim- 
eyed, brutish way these institutions are tried out; storm 
and restorm; the liberal and the conservative are born; they 
battle to and fro, scarcely knowing why or for what they are 
battling. Upward still they climb, from the brute to the 
savage, from the savage to the barbarian, from the barbarian 
to the semi-civilized, and then at last into the light which we 
now term civilization. 

Thousands and thousands of years have elapsed since first 
this upward march began, — tens, and according to some even 
hundreds of thousands of years; we need not here seek all 
possible accuracy, but man has existed on the earth from 
forty to two hundred and forty thousand, or according to 
later authorities over a million years. Records we have for 
some six thousand to nine thousand years ; the records of the 
preceding ages are lost save only what may be inferred from 
scattered remains of man's existence in extinct geological 
ages. Historical records of any considerable magnitude cover 
only about five thousand years. 



ECONOMIC INTERPRETATION OF HISTORY $ 

But then again how many faceted is that record; what a 
complexity, what a maze, a tangle, a very welter of frenzy 
and folly, crime, madness, heroism, joy, suffering, love, scorn 
of life, scorn of death, every shade of extreme opposites which 
human nature is capable of; all this helter-skelters, or hud- 
dles in shapeless masses across the pages. One gasps at the 
enormous multitude of acts and facts, is lost in " mazed per- 
plexity." No single mind can firmly hold all this detail, — ■ 
races, nations, classes, institutions, laws, manners, and morals, 
all of which vary with climes, situations, and times. To the 
average reader the whole is motley, or else an enormous 
seething ferment, the mother of every possible crudity. Nor 
can it be otherwise in its details. For just as every material 
atom plays a part in the physical universe, so too in the drama 
of history every human being counts something towards the 
total spectacle. Since then all details as such surpass the 
power of the greatest human intelligence, it is necessary to 
group these details into subgroups, and to gather these sub- 
groups into larger groups; it is necessary to fashion some 
scheme, idea, or concept, which shall fuse these details into 
a more or less comprehensible whole. Only thus can order 
arise in the vast disorder, only thus from the chaos can come 
a cosmos. Such an idea, scheme, or concept, constitutes an 
interpretation of history. It is the intention here to make 
mention of some of these schemes, and especially to call 
attention to the latest and most important of them all. 

THEORIES OF HISTORY 

The assumption is, — man evolved from the brute. The 
theory of the golden age, the original perfection of man, sim- 
ply makes history and the progress of men unintelligible. It 
runs counter to the whole trend of modern science. Man then 
emerged from the brute, ignorance within, beast and brute 
without. But even as to-day an animal shows by its action 
its recognition of an outer force superior to its own, so 
rising man did the same. In time he came alst) to recognize 
in himself something which we now call personal initiative; 



4 ETHICS AKEi ECONOMICS 

he was himself somehow H ctfittt oi power, he himself wis a 
cause from which results flowed. In the end he tried to ex- 
plain natural events in a similar fashion. Hence he clothed 
all nature with powers like his own. He peopled wood, 
forest, mountain, stream, and lake. In all the manifestations 
of fire, flood, storm, sunshine, growth, decay, he saw the 
effects of beings similar to himself. Stronger minds " sate 
brooding o'er this abyss."^— and so came at last the concepts 
which gave us in the end the concept of deity in all its 
shadings. 

After achieving existence, this concept achieved indeperi* 
denee. It then functioned backward as indicating the primal 
cause of all things. Hence history became a field for the 
exercise of the divine. Crudely enough at first the idea would 
be worked out. The gods stood apart from man, benevolent 
influences, malevolent powers, Ormudz and Ahriman, deities 
and devils. They fought their own fights, and used mankind 
as playthings of as tools of their plans. Or, again, as external 
agents, they directed the course of human events in accord- 
ance with their purposes or caprices respecting man's good 
and their own. Hence fetishism, totemism, mythologies^ 
Homer, Herodotus, the Greek dramatists, local and state re- 
ligions, and all sorts of religious cults. We do hot seek here 
all possible accuracy. The simple idea is that the concept of 
the divine regulation of human aflfairs was purified in its 
passage from fetishism to monotheism arid that this concept 
lives in lull vigor at the present hour. 

Every country and age will illustrate the power of this 
concept. The example most familiar to us all is the Jewish 
theocracy of the Old Testament. The Jewish people are 
there represented as the chosen people, the immediate and 
peculiar care of God. Through His chosen instruments and 
servants, MoseSy Joshua, the judges, kings, and prophets, He 
saved His people out of captivity, led therii through the wiHer- 
ness, delivered ort Mount Sinai to Moses, With whOm He 
talked face to face, the tables of the law, and through Moses 
and his successors, established and maintained the theocracy 



ECONOMIC INTERPRETATION OF HISTORY 5 

©f Israel. Throughout the entire story, Israel is constantly re^l^ 
resented as always more or less under the immediate direction 
of God. No pious Jew can doubt that the history of Israel 
at least was divinely directed, whatever the meaning and 
purpose of the history of other nations. Naturally such an 
interpretation must have spread wherever Jewish religious 
conceptions took vigorous root. Hence, Christianity and M.)- 
hammedanism are permeated with the doctrine. The thought 
works in full vitality throughout our whole civilization. 

As a doctrine, the divine guidance of history has elements 
that lie in two difTerent regions, the region of faith and the 
region of knowledge. In the region of faith, it is open to 
every believer to entertain the thought that the divine power 
directs the course of history. To faith, the motley of humari 
history undoubtedly has a plan and scope which to proper 
intelligence would be perfectly mtelligible. But then to faith 
" God moves in a mysterious way, His wonders to perform." 
Hew, why, by what means can not be fathomed, for " the 
ways of the Lord are unsearchable, past finding out ; " 
"clouds and darkness are His throne." By hypothesis, He is 
supreme intelligence whose ways and purposes, so far as 
definiteness goes, are utterly inscrutable. We may bow the 
head in humble reverence, we can not presume to interrogate. 
As a workable scheme in the walks of human knowledge, the 
divine guidance of history is unavailing. The maze remain*? 
not less a maze to us, even though we believe that to other? 
of perfect intelligence the maze is perfectly transparent. And 
in this condition we must leave the subject. Faith may ease 
the heart ; it does not furnish a workable formula to solve 
history's problems. 

As men progressed in refrned intelligence, many found 
unsatisfactory the concept of God as a huge being placed 
outside the universe, now and then with a push setting it 
right, or as with the Jews, occasionally straightening^ out 
superhuman tangles. Such a conception seemed derogatory 
to the divine perfection. Creation seemed too much lik-^ a 
bungle. Hence the more refined and abstract view, that God 



6 ETHICS AND ECONOMICS 

governs and directs the entire physical and spiritual universe 
by general laws. His work is perfect from the outset. He 
sees all things from the beginning. He needs not, like the 
puny artificer man, make a trial here, a patch there, or rectify 
mistakes as they occur in actual experience. By no means. 
Foreseeing all possibilities from the very first, His plans and 
purposes are so framed as to realize themselves mfallibly 
by the very qualities and laws of the things which He himself 
formed. He wills perfectly to a perfect result. But God is 
moral perfection. Hence, too, moral order must pervade the 
universe. Hisloiy itself is shot through and through with 
this moral order. Hence, to learn this moral order we must 
study history, which in turn is cleared and becomes expiica- 
able from the existence of moral order and general laws. 

Again it is not the purpose here to contest these proposi- 
tions. As before, there is the region of relig'ous faith, and the 
region of working knowledge and reason. Tennyson in his 
great " In Memoriam " has traversed the entire ground. In his 
own words, " We have but faith, we can not know ; " — " Oh 
yet we trust that somehow good will be the final goal of ill ; " 
■ — "That nothing walks with aimhss feet;" — and that there 
is " One far-off divine event, to which the whole creation 
moves." So clear to faith is ." the one far-off divine event," 
that the multiplex of history is no longer without form, no 
longer without meaning and purpose, and thus not without 
a pervasive principle of interpretation. But to mere human 
intelligence, the concepts of morality and " one far-off divine 
event " are too general. You can not descend into the arena 
with such weapons as these. They leave the enormous mul- 
titude of concrete historical facts as unworkable, as intract- 
able, as discordant, as if divines, philosophers, and poets had 
never labored to such superb results as Tennyson's " In 
Memoriam." 

It were quite possible to dwell upon other phases and 
shadings of these two conceptions of history, such as " Fate." 
** Destiny," " The Logic of Events," and so on, but we pass 
to something seemingly less high and remote, to man himself. 



ECONOMIC INTERPRETATION OF HISTORY 7 

For, after all, man as man, — the very meanest of all man- 
kind, — is a prodigy, well nigh a miracle. Man has somehow 
arrived. Reason, emotion, conscience, will, are somehow here 
an time and space within us all. Often you have heard of 
the dignity and worth of man. Often you have heard of his 
inalienable rights, and often, doubtless, because of cruelty and 
injustice, your passions have been aroused, your nerves 
tingled, your temples throbbed, your hearts hammered in 
your chests, your whole man was as a coiled compress, as a 
caged thunderbolt, and you felt then man's worth indeed. 
Man then has somehow arrived. Whence this miracle, man 
and why? You would understand his course and destiny. 

Go, then, to Hegel's " Philosophy of History," " the 
crowning achievement of a comprehensive intellect." Says 
Hegel in effect (Morris) : " We see in universal history a 
drama in which nations are the actors. The theme of the 
drama is human character. The Philosophy of History 
undertakes to pass in review the drama as a whole, to dis- 
cover the final cause, to demonstrate its motive, to indicate 
its significance, * * * The true subject of development 
is especially the human spirit. This spirit viewed according 
to its essential nature as defined in the notion of freedom^ 
this is the fundamental subject of universal history, and hence 
also the guiding principle of development, * * * as also 
conversely, historic events are to be viewed as products of this 
principle, as deriving only from it their meaning and char- 
acter. * * * Universal history is the unfolding of 
spiritual being in time, as nature is the unfolding of the divine 
idea in space, * * * history is progress in the conscious- 
ness of freedom." 

There you have it. The maze of history is untangled, the 
formula is secured, " History is progress in the consciousness 
of freedom:" conversely, "historic events are to be viewed 
as products of this principle, as deriving only from it their 
meaning and character." Do you not catch the idea? Take^ 
then, this abstract idea of freedom down from its lofty heights 
into the sweaty tumult. Explain with it how man comes to 



8 ETHICS AND ECONOMICS 

enslave his fellow-man through all the ages; explain by it 
the origin, continuance, and growth of despotism, state, social, 
legal, religious. Explain wi.h this principle the million-sided, 
multi-colored spectacle of human history in all its innumer- 
able concrete details. Absurd. The weapon is as air gras ;ed 
by the hand. It is as if a man were to predict a chemical 
combination by means of abstract conceptions of space, time, 
matter, motion, law, mathematics, cause, and effect. The 
laws of material objects are found only by long, careful ob- 
servation of the objects themselves. The laws are inductions 
from experience. Man and men are not less real objects 
than are material things. As little can law be read into man 
as into material objects. 

Hegel's formulation seems simple enough. Determine upon 
some purpose or motive as adequate or important. Read 
history to find illustrations, then declare this motive to be 
the real driving power. And in effect this is what Hegel 
seems to do. He pitches for various anterior reasons upon 
freedom. And then he reviews universal history, weaving 
picturesque expressions together concerning the spiritual, the 
absolute, and freedom, garnishing the whole with multitudi- 
nous biblical phrasings, all tending to show how fine was 
Hegel's eye for a phrase. 

As a test for the concrete realities of history, of the 
sweating, fighting warriors, of the fiercely or gently loving 
and lusting men and women, of the ceaseless struggle for 
bread and wealth, it is perfectly evident that " man coming 
to realize his freedom " or " the unfoldment of reason in its 
progress of self-consciousness, freedom and self-realization," 
— such phrases will not fill the bill. Fine they may be as 
an appendage to an abstract a priori philosophy, but they 
afford not a glimmer of light over the real complexity of the 
real maze of the history of real men and real women. They 
represent a product rather than a cause. 

Another view: History is explained as both the consequence 
and the cause of human institutions, especially those of the 
state, the church, the legislature, the family, the courts, the 



ECONOMIC INTERPRETATION OF HISTORY 9 

police, and similar organizations. Yet these are but infants 
in age. Only a few thousand years ago, and not one of these 
institutions existed. What of the milleniums before they 
came? And how did these institutions themselves come into 
existence ? 

Or, again, since, after all, men are real objects that act 
and react upon one another, and since history also at bottom 
is but a record of the achievements of man, and, further, so 
wonderful has been the part played on the stage by some men, 
that still another school are wont to explain all history as the 
result of the actions and reactions of its great men. The course 
of history is determined by its Alexanders, Caesars, Pope 
Hildebrands, Lincolns, and so on. 

Evidently we here leave the realm of abstract ideas and 
come to palpable realties which we touch more or less closely 
every day. For it does make a great deal of difference to each 
of us what the structure of the state may be, what the temper 
of the army is, what the law reads, how judges and the police 
enforce the law, what the school and the church may be, and 
■whether we have to do with an Alexander, a Caesar, a Napol- 
eon, a Washington, or a Lincoln. These things are not 
ghostly abstractions. They are force-bearing realities. 

The mass of the great histories belong to one or other or 
both of these classes. Doubtless in all of them you will like- 
wise find reference to the divine guidance, to moral order, 
and even to the goal of the unfoldment of reason toward self- 
realization and freedom. But for the most part, you find 
events traced to the power of the state, to policy, to law, to 
the army, to this means or to that, to this folly or that. In the 
thronging historical procession, every fancy, folly, vice, and 
virtue has full swing, — save only that they are directed more 
or less by the long molding, yet every changing power of 
ideas and purposes embodied in great men, and in institu- 
tions of all sorts and kinds. 

Grand and satisfying as these ideas are, satisfying be- 
cause they deal with genuine realities and concrete truths, 
they still can not be final. Consider the myriads of ages of 



10 ETHICS AND ECONOMICS 

man's existence on the earth. It is perfectly certain that the 
Btate, the family, property, and law were once not at all what 
we mean by these words. Our institutions of the state, the 
family and so on are but infants in point of time. What of 
human development before our present institutions existed? 
Other institutions? But whence again those institutions? 
They did not drop from Hegelian clouds, nor spring seedless 
from the earth. Nor has an idea or a truth merely to be an- 
nounced to find immediate acceptance and opportunity for 
self-development. On the contrary, institutions and ideas 
have to fight for life not less than the meanest fungi and the 
highest vertebrates. 

Come from the school of Hegel, Karl Marx some sixty years 
ago, in the early forties, reviewing critically Hegel's " Phil- 
osophy of the State," swept back from Hegel's ghostly con- 
cepts into the very thickest turmoil of driving realities. He 
found the state, the family, law, institutions, and even con- 
•ciousness itself to be rooted and bottomed on economic ideas 
and relations. The economic interpretation of history was 
born. Not, of course, that others before Marx had not had 
similar thoughts. Only this, Marx was the first to use the 
thought masterfully. The tools to the user, — Marx is the 
true father of this doctrine. 

MARX'S INTERPRETATION OF HISTORY 

In the famous Preface of his " Critique of Political Econ- 
omy " Marx wrote in 1859 : " In social production in life, men 
enter into relations, definite, necessary, and independent of 
their wills, relations of production which correspond to a 
definite grade of the development of their material productive 
powers. The totality of these relations of production forms 
the economic structure of society, the real basis upon 
which a legal and political superstructure rises, and 
to which definite social forms of consciousness cor- 
respond. The mode of production in material life 
conditions the social, political, and sp'ritual life-process 
in general. It is not man's consciousness that deter- 



ECONOMIC INTERPRETATION OF HISTORY 11 

mines his existence, but conversely his social existence 
determines his consciousness. At a certain stage in his de- 
▼clopment the material productive powers of society fall into 
contradiction with the existing relations of production, or 
what is their legal expression, with the property relations 
ivithin which they had hitherto moved. From being forms 
of the development of the productive powers, these relations 
become their fetters. Then begins an epoch of social revolu- 
tion. With the change in the economic foundation the whole 
huge superstructure more or less slowly undergoes a revolu- 
tion. In considering such transformations two things must 
be distinguished: (a) the material transformation in the eco- 
nomic conditions of production, a transformation to be estab- 
lished as true on grounds of natural science, (b) the legal, 
political, religious, artistic, or philosophical, — in short, ide- 
ological, forms wherein men became conscious of this conflict 
and fight the conflict out. As little as one judges what an 
individual is, from what that person thinks of himself, just 
so little can one judge from his consciousness such an epoch 
of transformation. Rather, this consciousness one must ex- 
plain from the contradictions of material life, from the ex- 
isting conflict between social productive powers and relations 
of production. A conformation of society never perishes 
before all its possible productive powers are developed and 
new higher relations of production are never substituted 
before their material conditions of existence have been en- 
gendered in the womb of the old society itself." 

To put this ponderously grand statement containing past, 
present, and future, into less abstract general terms. Man 
is an animal before he is a thinker or a dreamer. The 
spiritual rests upon the material. To live, man first must 
eat, clothe himself, find shelter. The conditions under which 
he secures these results are the economic conditions under 
which he lives. To secure and hold these essentials he un- 
consciously creates customs, laws, institutions. A change 
in the mode of gaining food, clothing, shelter, by new inven- 
tions or discoveries causes a conflict between the old estab- 



1? ETHICS AND ECONQMIC3 

lished forms and the new forms struggling into existence. 
Other forms of consciousness, new ideas of right and wrong, 
of good and bad, emerge. New creeds and doctrines arise. 
When, by struggle and growth, the new methods of produc- 
tion gain the victory, nqw ethics, laws, and institutions con- 
firm and establish the newer methods. Further, within the 
society now more or less firmly established on the 
newer basis, an inevitable conflict arises among the 
modes of production. Hence, again, innumerable changes 
within any given society at any given stage of 
advancement. Hence, class distinctions with their in- 
numerable corollaries. Still further, societies conflict with 
other societies. These conflicts rest largely on the ques- 
tion of the production and the distribution of the gains from 
existing productive conditions. Hence, national and racial 
rivalries and hatreds. Finally, and on the whole, since so 
many institutions find their ultimate foundations in these con- 
flicts, and since man's individual consciousness is overwhelm- 
ingly a product of his social relations, it becomes clear that 
morals, religions, philosophies, arts, and aesthetics all are 
subject more or less to the deep-reaching influences of the 
economic structure of the society in which these find ^k- 
pression. 

This, then, in brief and in the rough is the economic 
interpretation of history,— a birth of the last fifty years. With 
this idea descend into the confused welter of historical facts 
and fancies. How intelligible and significant becomes the 
immense mass of seemingly discordant and meaningless facts. 
One can see always in clear view real actors, genuine men 
and women, seeking with fury or with stealth what they 
wanted, what you and I want this very day. This view is 
growing in power and influence. It has already sent to the 
rubbish heap an immense amount of historical writing. All 
history has to be rewritten in the I'ght of this conception. 

It has been called, even by its authors and some ardent 
expounders, the materialistic view of history, and it has 
already caused painful misgivings to numerous pious souls- 



ECONOMIC iKTEkPRETAtlON OF HISTORY 13 

But there need be no fear. This concept does not profess to 
explain everything. The gentlest trusting piety can adjust 
its devotional impulses to this view. There is no contradic- 
tion. There is some steadfastness in human character, some- 
thing calculable. So here. Even the ghostly verbiage of 
Hegel need not be retracted, nor is institutional history, nor 
are great men denied. Not at all. Only this, — any interpre- 
tation of history which aims to deal with real force-bearing 
factors must henceforth make intelligible peace with the eco- 
nomic factor or else straightway to the rubbish heap. The 
totality of man is not denied. But the foundation of the 
whole man is material. Material conditions are the determi- 
nants of mass movements, are directive of and the source of 
great human social changes. Apart from this foundation, 
there is no real history of the human race. On the founda- 
tion of the production and distribution of material goods, 
arise, interact, and perish the innumerable fabrications of the 
human spirit. 

History is but the evolution of economics. It is an 
aspect of the general doctrine of evolution. The origin of 
species as general life forms in the one case becomes the 
origin of societies, institutions, classes, states, laws, and morals 
in the other. And in this latter case, the production and 
distribution of material goods is fundamental. Law, ethics, 
politics, the collision of nations, the struggle of the classes, 
the clash of individuals, find the larger part of their explana- 
tions in the contest about material interests, be the disguises 
what they may. 

The thesis is tremendous in sweep. It can be justified 
only by detailed analysis applied to the entire field of history 
itself. The field has been as yet but scantily cultivated. But 
the results obtained are so brilliant that the ultimate occupa- 
tion of the whole ground can hardly be doubted. Of this 
analysis you will find convincing pieces in Loria's " Economic 
Foundations of Society," A. M. Simon's " Social Factors in 
American History," Roger's " Economic Interpretation of 
History." Much in Marx himself, in Engels, and in others. 



14 ETHICS AND ECONOMICS 

Here you can expect only a very rough outline sample applied, 
for instance, to our own history. 

ILLUSTRATION; AMERICAN HISTORY 

As a prelude: Consider that famous document, the Dec- 
laration of Independence. What millions have read and heard 
read that famous paper. Hearts were expanded, new life 
and force were born, souls were lifted beyond themselves, mil* 
lions of money and thousands and thousands of lives have 
dedicated that document to the revered muniments of history. 
Consider it economically. Its first two somewhat rhetorical 
paragraphs are introductory and expressive of the philosophy 
of government current at the time and appropriate to the eco- 
nomic concepts and conditions of the age. It then submits 
against King George's government twenty-nine indictments j 
ten of these indictments deal quite directly with conditions 
of material wealth, tax, commerce, and war; ten deal with 
British interference with our legislatures, laws, and other 
forms securing our proper economic conditions, life, liberty, 
and property; the remaining nine deal with various arbitrary 
governmental acts, such as substituting new legal modes, 
failure to do justice on the mercenary troops, and so on. Thia 
is the essence. The ethics, the philosophy, the emotion centered 
about the document are forms of consciousness corresponding 
to and giving passionate expression to economic needs. Simi- 
larly with that ancient palladium of English and American 
liberty, the Magna Charta, the Great Charter. The Magna 
Charta contains sixty-three articles; three are introductory 
and closing; forty-eight refer clearly to matters pertaining to 
property and property rights; the remaining twelve have to 
do with such matters as legal procedure, and so on — an 
echo of personal and property relations. Our document is 
much more rhetorical than the English charter, — a new phi- 
losophy had arisen from changed economic relations — but 
the weight of the two famous papers rests manifestly upon 
property, the production, the distribution, and the possession 
of wealth, together with the establishment of conditions for 



ECONOMIC INTERPRETATION OF HISTORY IS 

realizing the desire for this. And the procedure throughout 
has been an almost undiluted application of the reigning phi- 
losophy in economics, laissez-faire, unlimited competition of 
legally free individuals, — except for certain favored classes of 
industry. 

Our politics have been dominated throughout by economic 
elements. Hamilton's report on finance started a division, the 
assumption of certain state debts, revolutionary war debts, 
customs, protection, the national bank, and so on. These were 
decisive legislative acts. To be sure, at first these were try- 
ing times; it was a question whether the government would 
go at all; the economic side was decisive, — viz., the intolerable 
financial condition of the confederacy. This and the like sort 
of trouble in production and exchange during the Napoleonic 
period culminating in the war of 1812. 

Next came the slavery question, — for the following forty- 
five years. This question was at the bottom an economic 
conflict. Slavery was profitable in the South. It was un- 
profitable in the North. Slavery created an oligarchy in the 
South, which held and kept political power to defend its prop- 
erty, and used its revenue to support its political power. 
The South dominated the entire country for years. At length 
the commercial and industrial power of the North became so 
great that slavery sank in a sea of blood. The conflict of two 
different systems was over, — wage labor had beaten slave 
labor to the earth. 

You, perhaps, will insist that the struggle was not an 
economic struggle. You would raise it to the higher plane of % 
moral contest. One can agree perfectly that it was a mora! 
contest, but, then, whence came the conquering morality? 
From Christianity some will instantly say. But consider, for 
more than fifteen hundred years Christianity had been dom- 
inant throughout Europe, and consequently in America; yet 
slavery persisted throughout Europe all the while. One can 
grant perfectly that the contest was a moral contest, but then 
it was also and at bottom economic. The superior morality 
was the morality of the superior economic system. 



16 ETHICS AND ECONOMICS 

These earlier two periods of our history had, of course^ 
other interests, but that they also had to be largely economi.^, 
is implied in the fact that during this time we were effecting 
the material conquest of an entire continent. Since the war 
the story is the same. Naturally to heal the wounds of the 
strife between rival systems of production, one fallen, must 
mean economics again and again. Then resumption of specie 
payment, the tariff, the tariff again and again, trusts and free 
silver, trusts, and plutocracy. In the last twenty-five years 
nothing but tariff, money, commerce, industry. 

But again you say, the Spanish-American war was an 
ethical anti-economic outburst. Yes, undoubtedly, but 
again only in part. Fortunately for the oppressed Cubans, 
they were near to us, and their island was noble, fertile, rich 
in sugar and tobacco. Some of our people had money in- 
vested or to be invested there, and it cost us dollars to police 
our coast, and to pay Spanish duties. Then, too, Spain 
was weak and distant. Our moral indignation at the bloody 
Turk in Armenia, or the Red Nicholas in Russia is fine,-^ for 
home consumption ; — it were unprofitable in the world's 
markets. As a result of our Cuban experience we have the 
Philippines, and have learned to expunge one portion of that 
famous Declaration of Independence; some governments, our 
own at least, need not " derive their just powers from the 
consent of the governed." World commerce and the needs 
of trade and industry have changed our views of political 
equality. 

Going back still further in our history, economic conflicts 
are written in the very body of our Constitution. In it a slave 
counts three-fifths of a man,-— political power for the South, 
else no Constitution. So also, in the structure of the 
House of Representatives and of the Senate. Economic con- 
flicts threatened to stifle in the womb the yet unborn babe. 
Only the memory of the intolerable state of affairs in the 
then existing confederacy averted the crime. 

Economies caused the revolution,— illegal taxation and the 
exploitation of the colonies through navigation laws for the 



ECONOMIC INTERPRETATION OF HISTORY 17 

benefit of the mother country. The French and Indian war 
and other colonial wars were contests between France and 
England, among other things for the privilege of exploiting 
a continent for its own people. The colonists understood 
the point. They expended money and life freely for the 
ownership of this great land. Thus all the way through you 
will find that the keystone of all difficulties is the economic 
relation, the production and possession of material goods 
together with all the ranks, dignities, power, and influence, 
which are the inseparable companions of such possession. 

And not merely this, from economic conditions flowed the 
■fact that this government of ours could not be other than a 
representative democracy, a republic, not an absolute mon- 
archy. It was not merely that in the previous centuries the 
world had advanced hugely in morals, in breadth of soul, in 
tolerance, in an evolved idea of justice. All the high prin- 
ciples appealed to in this line can be found in ancient Greece 
and ancient Rome. The new outburst registered new eco- 
nomic situations and doctrines. A new era of production had 
set in. Free competition, liberty of movement, free contract, 
commerce, and industry, — these, with geographical char- 
acters, these determined the situation. A scanty population, 
a country teeming with natural resources of all kinds, free 
lands in abundance, pathless forests, lakes and rivers 
abounding in life-giving foods, a temperate climate 
stimulating to energy of body and character, — it was as a 
law of nature that such a people under such political and 
economic conditions must be free; must at the outset be more 
or less nearly equal ; therefore a democracy was inevitable. 
The land was large, distances great, the people relatively few 
in number; therefore a representative democracy. Whether 
a king or a president mattered but little in an economic sense, 
since either is compatible with such conditions ; only not 
an absolute government. Thus be the splendid concepts 
of that era what they were, the inalienable rights of man, 
freedom, justice, the heroic virtues, they all remain unde- 
stroyed, just as true as ever. But still they rest upon the 



18 ETHICS AND ECONOMICS 

economic conditions of the age and clime. They are the 
modes of consciousness appropriate to such and such eco- 
nomic conditions. 

Similarly, in a smaller way, it is almost amusing to notice 
the transition from the landed aristocracy of former times 
to the agricultural democracy of later days, — rather how 
attempted aristocratic imitations and adoptions from the old 
homestead quickly vanished before the democracy inevitable 
in a new land. Where there is free access to rich, unoccu- 
pied soil, or other natural sources of wealth, where all have 
to struggle more or less for possession and subsistence, 
where no ample supply of labor wage or slave is at hand, 
where slave labor can not be profitably exploited, and finally 
where the governing class whether at home or abroad has 
no sufficient force or army to drive its will through, in such 
a case no landed aristocracy, no aristocracy at all could 
flourish. In this country the attempts all perished. They 
had no economic foundation on which to stand. A similar 
phenomenon occurs in New Zealand to-day. 

In a similar way may be seen the gradual transition of our 
country from an almost purely agricultural community to our 
condition to-day, wherein commerce and industry dominate 
the entire government. You can mark the progress, roughly 
at least, by a glance at the history of the tariff. As com- 
merce and industrialism grow the tariff grows, not however 
without struggles, until now the tariff plank no longer asks 
for •' a fair field and no favor ; " no, " the tariff must yield a 
reasonable profit to its beneficiaries." 

ETHICAL ILLUSTRATION; SLAVERY 

It were impossible here to attempt in every department of 
thought to cite striking cases to show the indirect but per- 
vasive influence of economic conditions. In the line of ethics 
one example merely, slavery in the South before the war. At 
the beginning of our government slavery existed among our 
people ; its existence is written in the Constitution. It was 
universally acknowledged to be a social, political, and eco- 



ECONOMIC INTERPRETATION OF HISTORY 19 

nomic evil. Governmental efforts were made to get rid of 
it. The ordinance against slavery in the Resolutions of 1787 
was voted with but one negative against it, and that one vote 
was from the North. But cotton was, as it were, discovered. 
Vast improvements had been made in machinery. England 
became the great cotton manufactory of the world. The 
South supplied the cotton. Slave labor was found profitable. 
Naturally in our " Declaration," where mere abstractions came 
into play, all men might be created free and equal. But when 
it is profitable for some to exploit the labor of others, with 
almost singular swiftness, those favorably situated for ex- 
ploiting clearly discern how unequal men really are. Rights 
become commensurate with endowments — nay, the weak 
must be forcibly kept in lower places for their own good, 
their own real benefit. The strong are endowed of God, are 
responsible tor the proper care of their weaker brethren. 
Slavery became a cherished institution of the South; slavery 
was an " ordinance of nature," it was " the will of God." 
Southern pulpits advocated it with every resource from his- 
tory, laws, ethics, and the Bible. Enslave your black brother, 
if you can, only treat him with Christian love and gentle 
charity. And chattel slavery in a limited region would be 
here to-day or it had gone out peaceably, only the South 
wanted too much of the spoils. Not content to plunder the 
ignorant, defenseless slave, it would also dominate the entire 
country, secure its present revenue and gather what more it 
could. It went out in fire and blood. (See Chaps. VI and VII 
for additional ethical illustrations.) 

But space fails. The subject is too vast. There is a world 
history to cover — every age, time, and clime, every stage 
of advancement, from the barbarian of Africa and the isles of 
the sea, through all the states of Asia, Europe, and the 
Americas. Let the above be merely an outline sample. 

ECONOMIC INTERPRETATION OF HISTORY AND SOCIALISM 

Karl Marx is the father of this doctrine of history. He is 
also the father of what is called " Scientific Socialism." Marx 



20 ETHICS AND ECONOMICS 

interweaves the two, making the one the outcome of the 
other. And so I suppose many people will hate and despise 
the one, because they hate and fear the other. In vain. 
If Marx be right, be wholly right, the scorn is as futile in 
the one case as the fear in the other. If Marx be partly right, 
so far his theories will stand ; the rest will perish. But such 
persons need not be unduly concerned. The connection be- 
tween Socialism and economic development is not a narrow, 
easily defined path ; rather it is a broad highway wherein mul- 
titudes of forces jostle. Marx's tremendous power of mind 
and of passion hurled him not only from the ghostly abstrac- 
tions of Hegel to the concrete forces of economics, but also 
from the absolute German state of " pure-reason " thinkers 
and of fact into non-utopian Socialism. He may be right or 
wrong in one or in both of these points. At all events, each 
must stand on its own foundations. 

If the economic interpretation of history be correct, then 
if Socialism come. Socialism will certainly illustrate the 
doctrine. If Socialism do not come, the historical doctrine 
remains true none the less. Whatever social future de- 
velop, it must come influenced and dominated by the eco- 
nomic element. The economic interpretation of history will 
furnish in large part the needed explanation. We see that 
economic forces molded the present out of the past; we see 
economic forces working, molding, ceaselessly shaping, and 
reshaping ethics, laws, politics, and other social forms in the 
present; we doubt not that these same forces will shape and 
dominate the future. What that future may be, no one can 
definitely say. Socialism is but one of the possible visions. 
The competent anal5^sist of a completed past need not be 
identical with the analysist and seer, who from wavering ten- 
dencies in the present foresees the outcome in the future. 
Marx may have hit the center in the one case ; he may be 
far astray in his vision in the other. As with other seers, he 
judges according to his power of analysis of the present, and 
his capacity to reason out and image remoter consequences 
of the tendencies observed. Mistakes here are easy, the situ- 



ECONOMIC INTERPRETATION OF HISTORY 21 

ation is intensely complex, and there is no check except in 
the non-existent future. Some see Socialism in the future; 
some see individualism forever; some see a mixture of the 
two. But come v^hat may, economic forces will mostly de- 
termine whatever shape the future may put on. 

ECONOMIC detp:rminism: not the narrow economic 

Just as narrow-minded persons would reject this doctrine 
of history because it is fathered by Marx, so others from 
cultural or religious views are oflfended because it has been 
called materialistic. " What," they cry, " ethics, religion, phi- 
losophy, science, art. culture, merely a question of the 
stomach ! Faugh ! disgusting, narrow, vicious." Thus they 
leap to bigoted extremes. And yet, up to the present at 
least, souls usually reside in bodies. The most ecstatic poet, 
the most exalted lover, the abstractest philosopher, the saint- 
liest divine, are yet possessed of bodies with all their passions 
and appetites. Yes, if you will, the stomach must be filkd; 
at intervals at least, else the poet's song is his swan song, or 
the dreams of the lover, the philosopher, and the divine 
become the gibberings of raving animals sinking into death. 
Mind, intellect, spirit, soul, be they what they may, still ex- 
ist and manifest themselves with power, still condition the 
labor of life, voice its sorrows, its joys, its hopes, its fears, 
its raptures and its anguish; more than that, they still 
condition and limit the range and point of application of 
economic forces and not infrequently oppose the direct eco- 
nomic itself. Thus in ever}'- age, in the institutions which 
they create out of the economic, they become as it were 
constituents of the total economic structure, and thus are 
causes of the course of future development. As Marx says, 
they are either forms of development or they are fetters. 

Hence love, charity, justice, law, morality, art, culture, 
literature, philosophy, all have power in determining the total 
aspect of any historical epoch. Thus too it may be said 
that there is a legal, a religious, a racial, or an ethical inter- 
pretation of history. All these things are real, and have 



22 ETHICS AND ECONOMICS 

more or less a vitality of their own. But it is impossible to 
divorce them safely from their material source. History 
with them alone is playing with ghosts, for in much they voice 
only idealizations of existing institutions. What gaps in 
such stories! What unintelligible stretches to be filled only 
with vague guesses and Hegelian verbiage. You can not safely 
scorn the material. Consider the careers of the reformers. 
They are always broken more or less, or sadly wrenched 
from their intended goal by the bursting through of the 
material and brutal economic. The idealists and the reformers 
are few ; those who eat are many, and these will fill their 
maw, though it be, as the reformer thinks, only with the 
husks of the swine. Hence, the idealist and the reformer 
must somehow combine their conception profitably with the 
material interests of the dominant classes of mankind. Know- 
ing that man, mostly ignorant and therefore narrow, bases 
and positively must base upon physical necessities, the wise 
idealist will seek a like foundation for his broader, nobler 
views. Only thus can his ideals pass from the land of dreams, 
— what splendid visions there unroll ! — into that of the 
real, there to serve as the material and spiritual basis of a 
loftier and mightier development. 

As always and ever the material breaks into pieces Utopian 
dreams, so always flower out upon it ideal extensions, the 
glory of the material, higher purposes and desires which also 
in part influence and direct the lower economic. Therefore, 
not one word in derogation of the true, the beautiful, the 
good. Rather let all and more of us have more of these high 
nobilities. Let all and more of mankind be raised far above 
the condition wherein the brute remains untamed, wherein 
the naked economic demands so far engross all energies that 
he must remain a brute. Until this higher plane be reached 
it is right that history be ruled by the so-called low economic 
motive. The tax is just until man achieve a state wherein the 
economic weight shall press, as does the atmosphere, equitably 
in all directions. Thus freed from unequal pressure, each 
shall be genuinely free, free first from the conditions which 



ECONOMIC INTERPRETATION OF HISTORY 23 

condemn to a lifelong struggle for mere animal existence, free 
then to be humanized indeed, to be a dweller in the region 
where high ideas have full sway and work out on an ampler 
field all the wealth of their manifold possibilities. Instead, 
as now, the few singers, priests of light, devotees of a cul- 
ture for only a small minority, mayhap the entire land, as it 
were will swell full-throated a varied song. Each man, no 
longer a brutish animal, shall be a willing servant of the 
light, — there shall be no darkness there, nor misery, nor 
tears, — all shall be radiant, differing as do the stars, yet each 
having his own glory. Thus culture shall be the birthright, 
the possession of all. The economic struggle as we know 
it shall be no more. The brute shall have been transcended. 
Man becomes man indeed, body and spirit in perfect 
unison. 



CHAPTER II 

ETHICS AND THEORIES OF PROPERTY 

Social Unrest and Property. — Theories of Property: Juristic; Con- 
tract; Absolute Rights; Law and Government; Work; Economics 
of Production; Economic Determinism.— Fundamental Principles 
Must Be Scientific : Science Is of the Real ; Is Economical ; Is 
Predictive — Divine Sanction, Unscientific. — Intuition Is Use- 
less. — Ultra individualism, Self-contradictory. — Egoism and Al- 
truism. — Class Struggle and Class Consciousness; Cause of Social 
Evolution, Man under Various Motives : Life ; Economic Power ; 
Culture Ideas Involve Economic; Ethical Largely a Transfigured 
Economic ; Contrasted with Abstractions ; Property Relations 
Will Continue To Change. 

The present age seems an age of transition. Unrest exists 
everywhere. Political and social institutions are trembling 
under fierce destructive and constructive criticism. For many 
the specter of the day is Socialism. Sounds of the griiid'ng 
of elements are heard in Germany, in France, in Great Britain, 
in fact in all Europe, and in the United States. The central 
point in the agitation is the origin and limits of property and 
property rights. Accordingly, we shall here discuss briefly 
some aspects of property. 

The question of property and property rights is rather 
important, since neither saint, philosopher, nor savage can ex- 
ist without property, that is, without consuming material 
goods. A theory of property must certainly be complex, 
because property, touching life as it does on every side, 
seems as various as life itself. Every class, trade, profession, 
in fact every human interest affects and is affected by prop- 
erty views. Each passion, each interest claims consideration 
for itself, hence theories of property are as many-sided as 
human feeling. As the viewpoints change, different aspects 
emerge with a different distribution of strength and im- 

24 



ETHICS AND THEORIES OF PROPERTY 25 

portance. To the divine one thing seems essential; to the 
warrior another thing; to the lawyer still another; and so 
on with the economist, the workman, the capitalist, the scien- 
tist, — " each chases his favorite phantom." It is both need- 
less and impossible to pursue all these variations in detail. 
We shall present a few theories in broad strokes in order to 
offer some remarks upon important principles lying at the 
foundations of the chief theories of property. 

The various elements appealed to by property theorists 
may be broadly distinguished as absolute and relative. That 
is, some elements are held to be indisputable or invariable, 
as always valid; while others are regarded as changeable, 
as varying m power and validity. On the one side we have 
abstract generalities; on the other side concrete particulars. 
Some appeal to the divine sanction, to the laws of nature, to 
pure ethics, or to man as man. Others appeal to the laws oE 
actual societies, to actual economic forces, to ideals derived 
from actual human relations. We shall not seek to classify 
and pursue in detail these possible variations. In truth, but 
few theorists can or do advance far in either direction without 
invoking aid from the other side. Thus the absolutist 
quickly gets back to the relatively concrete, while the rel- 
ativist must needs give a kind of generality to his maxims 
which easily slides into another seeming absolutism. Black- 
stone in Chapter 1, Book 2, of his " Commentaries," presents 
the usual course. He starts with the absolute, that is, the 
divine sanction, and then passes in review phases drawn 
from most of the other general views. He presents his case 
with all his admirable legal ability and style, and doubtless 
closes the discussion for many of his readers. Let us here 
present the elements of some theories, following and using 
for this purpose Laveleye's classification and matter in his 
" Primitive Property." 

THEORIES OF PROPERTY 
Juristic Concept. — The Roman jurists and most modern 
ones hold that the principal title which confers property is 



26 ETHICS AND ECONOMICS 

occupation, seizure, the taking possession of things without 
owners, — " finders is keepers." For what belongs to no one 
is conceded by natural reason to the seizer of it. This Roman 
idea of seizure, possession, occupation, is at the bottom of 
ownership from the right of discovery, from colonization or 
migration. By a further extension it is made to cover in- 
heritances and testaments or wills; in fact, jurists or law- 
yers, with characteristic ingenuity, stretch occupation, seizure, 
or possession so as to cover a vast multitude of possibilities. 

Contract. — Akin to the above are such theories as spring 
from the idea of contracts. Hobbes, Locke, Rousseau, all 
make use of this idea of contract as the source of all gov- 
ernment and of property relations. Thus, according to Hobbes, 
by nature all men are in a state of war with one another; 
there is no government, no property. Each is against all, 
and all are against each. Settled government and property 
rights arise only when men agree to surrender some so-called 
natural rights in order that they may secure for other rights 
a solid social guarantee. Locke, Spinoza, Kant, and number- 
less others agree to some phase of this idea. Rousseau's 
" Social Contract *' was the most famous and influential pre- 
sentation of this thought. 

Natuyal Fight and Ethics. — Similar to the above, but 
from other viewpoints, are ethical theories starting from the 
worth and dignity of man. Thus people speak of the natural 
right to life, to liberty, to a development consonant with man's 
true worth and dignity. Others speak of " laws of nature," 
and still others appeal to the deity as the cause and origin 
both of " laws of nature " and of human worth. Since prop- 
erty, that is, a store of material goods is a precondition 
of life, liberty, development and dignity, property rights are 
regarded by some as primitive and original, while others 
hold them to be secondary and derivative. Thus Cousin 
says: "Property is a necessary consequence and condition of 
liberty. Liberty is sacred ; property ought to be the same." 
Fichte says: "The right of possession is an immediate and 
inalienable right, and precedes all law." Aherns says: 



ETHICS AND THEORIES OF PROPERTY 27 

"Right consists in the totality of conditions necessary for 
the physical and spiritual development of man, so far as 
these conditions depend upon the human will." Property is a 
natural right, a condition necessary for every man for liberty 
and individual development. The commandment, " Thou 
shalt not steal," was written by the finger of God upon stone 
tablets at Sinai. It would be easy to multiply to pages 
similar quotations. 

Law and Government. — Another view finds property and 
property rights rooted solely in law or in the civil power. 
Thus Bossuet : " Take away government, and land and all 
goods are as common among men as light and air — every- 
thing is prey to all. Similarly, Montesquieu, Mirabeau, 
Tronchet, Robespierre, de Tracy, and others. Bentham says: 
*' I count upon the enjoyment of what I call my own only 
upon the promises of the law which guarantee me therein. 
Property and law are born together and die together. Before 
law, no property. Take away laws, all property ceases." 
Similarly, Maynz: "The three legislations [Roman, German, 
Slavic], which share Europe, have derived exclusively from 
the state the absolute power over a thing, which power we 
designate by the word property." 

'Work. — Locke and Adam Smith first expounded the theory 
that not seizure nor occupation, but work constitutes property 
and property rights. Locke says: "God gave the earth in 
common to men, but as they are able to enjoy neither the 
soil nor what it provides except under a private title, it may 
well be admitted that an individual may avail himself of an 
object to the exclusion of every other. The extent of a man's 
work and the convenience of life are the natural regulative 
reason of property." " The necessity of private property re- 
sults from the conditions of human life which requires work 
and a certain matter upon which it may act." Adam Smith 
further handled work as the measure of value, which declara- 
tion reverberates through all Socialistic discussions. 

Economics of Prodncticn. — We come now to another gen- 
eral class of grounds — namely those which rest upon eco- 



28 ETHICS AND ECONOMICS 

nomic considerations of production. Thus, in effect, accord- 
ing to the German Roscher: "The institution of private 
property furnishes a stimulus to work, to saving, to increased 
productivity of labor and capital." Mill says : " The private 
appropriation of the soil has been considered profitable both 
to those who have no share in it and to those who have. The 
community and the human race has the greatest interest 
that the land produce its utmost." These statements could 
be increased in number and variety, but perhaps these suf- 
ficiently indicate the point that with certain economists the 
emphatic or dominant reason justifying the property re- 
lations lies in the economic results of the institution. 

Economic Determinism. — Finally we note that aspect 
which results from applying Marx's doctrine of the economic 
interpretation of history to the whole problem of human 
social evolution. Marx also was economist. With him the 
economic takes so broad a sweep in its direct or indirect in- 
fluences that all conscious human life is subject to its sway. 
Thus for him, Roscher, Locke, Hobbes, Rousseau, Smith, 
Cousin, Fichte, Bentham, Mill, theologians and absolute phi- 
losophers in general catch here and there but one or more 
aspects of the questions. They give partial solutions ot 
special cases, not the general formula. He easily, in many 
cases, can resolve and explain their solutions as but partial, 
as in fact dominated by economic motives. With him the 
production and distribution of goods conditions conscious- 
ness in general. Ethics, philosophies, politics, rest upon 
economics, and the history of civilization is the clash of eco- 
nomic interests cloaking themselves in all sorts of trans- 
figured formulae and generalizations. Seemingly far removed 
from the economic, they yet all the time pulsate with life 
streams flowing from economic sources, and reach their ful- 
fillment more or less in the turbulent ocean of class struggles. 

The various theories of property just indicated clearly imply 
a great variety of principles. Some of these are discordant, 
some are overlapping, and all contain elements of plausibility. 
It is certainly not the purpose here to mete out praise or 



ETHICS AND THEORIES OF PROPERTY 29 

blame accurately or to measure the worth of each; still less 
to present a scheme to end the discussion with certainty. 
In one sense the intention is to increase the confusion in 
some minds, but in a better sense to stimulate to a discussion 
of the problem. Let us then touch upon critical principles 
at the foundation of some of these theories. 

CRITICAL PRINCIPLES MUST BE SCIENTIFIC 

Critical judgments imply fundamental principles. No rel- 
atively final estimate can be made until the deepest postulates 
are dissected and understood. Until and unless these aspects 
are threshed out somewhat thoroughly, discussion is apt to 
be a mere beating of the air. Antagonists never really meeting 
one another fail both to understand and to be understood. The 
deeper the passions invoked, the greater the interests involved, 
so much more the need of a thorough sifting. Exactly this 
is the case with the question of property rights, for this ques- 
tion touches nothing less than the foundations of society. 
Let us then try to get at some fundamental presuppositions 
in this question of property and property rights. 

The thing first of all and of chief importance is to ask what 
sort of principles is to be accepted as relatively final for 
this question; that is, in what sphere and from what sphere 
the principles are to be taken. Our answer at once is that 
these principles must spring from and go back to real things 
of human experience and knowledge, in one word, they must 
be scientific. We can accept nothing less, and nothing else. 
Choose your ground. 

Property and property relations are very real, and they 
lead to very real results. Their problems are before our 
very eyes and affect every movement of our present life. 
Since society itself must manage these problems, the prin- 
ciples must spring from and relate to real and manageable 
things, that is. the principles must belong to human science. 

(a) Science Is of the Real.V— Now the quest of science is 
always for real elements ; if possible for agents which can be 
manipulated directly or indirectly by human hands, that is, 



30 ETHICS AND ECONOMICS 

by human experimentation. Explanations must root in re- 
ality. However remote the concept may be, such as the un- 
dulatory ether or the electron theory of matter, the formula 
leading to it must be a transcript of real experience, and must 
conduct back to real experience. Science as a general concept 
involves plurality, and therefore objective external aspects, 
and therefore, again, it must come back directly or indirectly 
to sense perception. Science has long since got rid of occult 
causes and fanciful agents. It has drawn and insists upon 
the distinction between arbitrary abstractions and realities. 
Spirits or angels are no longer as with Kepler or as with 
ancient mythology the charioteers of sun, moon, and stars. 
Dryads have deserted the forests, nymphs the fountains, 
nereids the sea. " Proteus rising from the sea " and " Old 
Triton with his wreathed horn," dead to science, merely turn 
beautiful phrases to express the emotions of the poet. 

Causes for the purposes of science must lie within the scope 
and ken of human objective experience, that is, they lie be- 
yond the individual fancy, they are open to approach and in- 
vestigation by others. As Kant has shown, it is only by the 
congruence or agreement of our experience with itself and 
with the experience of others, that we can securely dis- 
tinguish reality from idle personal fancies or from the de- 
lusions of insanity. Property and property relations are 
such objective realities; hence the principles whereby prop- 
erty rights are to be tested must be just as broadly and 
widely real. 

(b) Science Is Economical. — Again science is ruled by 
the law of economy. Principles are not to be multiplied 
needlessly and the connection is to be as simple and compre- 
hensive as possible. They are to be used economically. The 
possibilities of a principle are to be exhausted before the aid 
of novel ones is invoked. 

Not every new problem is to be the occasion for the coinage 
of a new principle. The history of science is littered with 
fantastic solutions violating this requirement. Filled as it 
is with analogies, it yet seeks to lessen the demand and to 



ETHICS AND THEORIES OF PROPERTY 31 

penetrate to the essential. The like procedure must obtain 
with the question of property. 

(c) Science Is General a ut Predictive. — Again science de- 
mands that principles shall be manageable, shall have a work- 
able quality, a power to suggest lines of research and to fore- 
tell possible new advances. Each explanation shall sweep 
into its net larger and larger masses of known phenomena, as 
well as find and almost foresee phenomena as yet unknown 
and unexperienced. The history of science shows multitudes 
of such divinations and predictions. Any principle, theref jra, 
which does not possess such power to absorb past experience 
and to anticipate possible future experience is practically 
worthless for science purposes, no matter how high, or 
beautiful, or grand, or satisfying it may be in other respects. 
Now property relations are interwoven with all known past 
experience ; they touch every side of our present life ; and for 
all we know they will encircle the human race as long as 
it shall exist upon this earth. Fundamental property prin- 
ciples must accordingly have just as wide a range of explain- 
ing and of anticipating power. For those not prepared to 
demand and to accept such principles for the property rela- 
tion, this discussion may as well cease right at this point. 

THE DIVINE SANCTION IS UNSCIENTIFIC 

At the outset then the theological side of this question may 
be disposed of. The divine sanction and institution of prop- 
erty is often invoked. Notice the question here is not in the 
least the origin, the validity, and the limits of the idea of the 
divine. The question is not its influence or ultimate character 
in various fields of human thought and sentiment. The ques- 
tion is not theism versus anti-theism, as some crude or pas- 
sionate persons might hastily imagine. The question is 
much simpler and tamer. The question is the workability 
of the idea of the divine within the field of natural science 
and especially in this property question. The answer at once 
is, the solutions of the problems of science can not receive 
assistance from the idea of the divine. To the ancient Greek 



32 ETHICS AND ECONOMICS 

or Roman believer the Deity was a possible scientific element. 
Every forest, lake, stream, every natural phenomenon was the 
province of some particular god or half-god. Phoebus ApDllo 
drove the sun and caused pestilences ; Artemis guided the 
moon; Aeolus, the winds; Neptune the sea. But then the 
Greek Deity was a multitude of deities, each of limited range 
and power. Indeed, they were nothing but gigantic men, and 
so not wholly beyond human power and management. But 
to us, Deity has become as wide as cosmos — yes, wider. He 
is infinite in power, omniscient, inscrutable, in short, all limits 
have been stripped from Him ; as a consequence. He is utterly 
beyond human power and control. Omnipotent, inscrutable, 
— predictive power and manageability are gone. Experimen- 
tation, with Him involved as a possible factor, is futile. Thus, 
the concept of human science and that of Deity are become in- 
trinsically contradictory. Science is forever cut off from 
using in its limited sphere this idea of Deity. 

Or apply this to the property question before us. Have we 
or have we not a direct revelation from the divine in the 
matter of property relations? Is property a divine institu- 
tion in any special sense? Is that revelation as wide as the 
property relation is and has been? Treat the matter so 
broadly as to compass all past and present relations of prop- 
erty, then all times, customs, and climes have had that 
revelation, whether it were direct or indirect. Treat the 
matter as narrowly as this or that particular sectar'an 
is apt to do, and the revelation if direct is likely 
to be confined to a specific place, time, and people. 
But an examination of the property relations, such as are rrai- 
ifested throughout the earth to-day, shows an enormous di- 
vergence and diversity. Things valueless and not property 
at all among some peoples are common property with other 
peoples, are private property with still others. And of 
course these diversities and similar ones, to enumerate which 
would fill books, sweep over all times and past centuries of 
extinct civilizations. If then the revelation be direct and 
general, how will you make your conception of Deity and 



ETHICS AND THEORIES OF PROPERTY 33 

direct revelation consonant with such enormous diversities 
of property concepts in past and present times? Where is 
the revelation, who possesses it? Has each tribe and nation 
received its own? Or is the revelation confined to the barren 
formula " have and hold," without indication of content and 
limits? Stjll worse is the case if the revelation be direct and 
confined to one particular place or people. What is to be 
said of the vast and diversified property relations of times 
and peoples preceding or not having knowledge of such a 
revelation? In that case, the theory of property as a direct 
divine revelation and institution fails to embrace all the phe- 
nomena to be explained. As a pretended scientific or com- 
plete explanation, it is a nullity, a futility. It is the apo- 
theosis of sectarian ignorance. 

The revelation then must be indirect. But then, what is 
the meaning of an indirect revelation, and how shall the reve- 
lation be read and interpreted? Now, broadly speaking, an 
indirect revelation is such as emerges from a study of the 
manifestations, the tendencies and the results of the inter- 
action of things. It is a case of circumstantial evidence. We 
are then thrown back for our answer upon human reason, 
human principles, in a word, upon science. But this is in 
effect nothing else than the abandonment of a special inde- 
pendent divine sanction. If to know the divine will, purpose, 
or idea, we are thrown back into the turmoil of human pas- 
sions, interests, and thoughts, we are in fact setting up hu- 
'manity as the judge and determiner of the content of the 
divine nature. But what the content of the divine nature and 
purpose may be — consult the multitudes of religions and 
sects of religions, see the variegated concepts of divine and 
devilish, of right and wrong, of good and bad, turn over the 
dreams, and the fancies of poets, philosophers, scientists, and 
theologians, of all ages and climes. You will see that no 
agreement is possible as to the divine nature. The vast di- 
versity of historic and present property relations shows that 
the indirect divine revelation and institution of property has 
experienced and does experience just as great a diversity of 



34 ETHICS AND ECONOMICS 

interpretations, and that therefore the divine sanction is as 
multiform as the phenomena themselves. The utter vacuity 
of the pretended explanation is manifest. The explanation 
is no more than a repetition in disguise of the very facts to be 
explained. In effect, it says, " these facts are and were, be- 
cause they were made to be. They were, God permitted 
them, and therefore they had the divine sanction; property 
was and is a divine institution." This theory gives no real 
reasons, tests, or criteria, nor can it give any. For thought 
and science it has no co-ordinating power. It leaves the 
multiplicity in all its nakedness. 

But further: As a religious ideal the divine is truly nothing, 
if it be not real, that is, if it be not in some sense external and 
independent. From this it must ordinarily follow that apart 
from special revelation, our knowledge of the divine is sub- 
ject to an evolution similar to that of our knowledge of other 
external realities. Therefore, unless we claim ourselves to 
be divine or to have direct commerce with the divine, our 
indirect knowledge of the Deity must unfold and change with 
our changing knowledge of external relations. This thought 
is the lifeblood of those Christian theologians who reconcile 
the Old and the New Testament conceptions with one another 
and with modern conceptions by the idea of a progressive 
revelation. Even those who claim direct revelations from 
the Deity must harmonize their new concepts with the mass 
of indirect knowledge; for it is with this as with all other 
external realities, congruity with the experience of others is 
our widest, solidest test of the real. Usually, however, we 
relegate to the madhouse too insistent claimants of divinity, 
and the number of exploded personal revelations found to be 
utterly incongruent with the developed knowledge is so great 
as to make all careful thinkers rather distrustful of any par- 
ticular claims or claimants. Hence, it follows that even 
with the postulate of the divine institution and sanction of 
property and property rights, we can expect only such change 
and diversity as have been found to exist already. 

From the intellectual point of view recourse is had to the 



ETHICS AND THEORIES OF PROPERTY 35 

divine because of inability to reason out, or to await a rational 
verdict. Often it is the demands of the heart usurping the 
functions of the head. The attempt is to get a finality, to get 
some fixed, stable, and unchangeable basis. Hence, the fre- 
quent appeals to eternal and immutable verities, to absolute 
and final justice, eternal right and so on. But as seen, we 
are landed either in the madhouse or in the idea of progres- 
sion in the concept of the Deity if we carry our demand too 
far. Since the Deity is conceived as " infinite, eternal, un- 
changeable in being, wisdom, power, holiness, justice, good- 
ness, and truth," as the author and creator of all things, men 
slip these ideas into some of their views, and hold forth that 
which is meant to satisfy the heart, as also an acceptable ex- 
planation for the head. We have seen the vacuity of this as 
a scientific explanation. In truth, the idea of the divine has 
been used in all ages, and in all civilizations as an aid to 
humility and pietism. The thought which seeks to encour- 
age proper religious humility and devotion has been used 
repeatedly as a cloak to give an air of sanctity to some ex- 
isting institution whose threatened disturbance disquieted its 
beneficiaries. It has been used to stifle inquiry, to lull dis- 
content, to add an additional strong motive for the preserva- 
tion of existing institutions. It was used thus in the past, 
it is used so to-day. But it has no proper place in a scien- 
tific discussion, and should carry no weight toward an intel- 
lectual verdict. 

"INTUITION" USELESS 

Next we must come to terms with such high-sounding ex- 
pressions as eternal truths, immutable justice and the like, 
expressions which as regularly appear in such discussions as 
does smoke from fire. Notwithstanding Kant's " Critique 
of Pure Reason," they are still the refuge of thousands when 
they are unable to harmonize their favorite views with the 
facts of reality. And, indeed, they do carry an appearance 
which staggers and daunts many just on the verge of ques- 
tioning their meaning and proper application. 



36 ETHICS AND ECONOMICS 

Now we must admit that there are immutable, everlasting 
truths, but then we must add, these truths are abstractions. 
So far as they express a real content, they do so under im- 
plied limitations. Forget or disregard the limitations, and 
the truth becomes a mere abstraction. Try to apply it to 
reality, while disregarding the limitations, and you are prac- 
tically certain to falsify the truth you pretend to utter. To 
obtain these eternal truths, lay down and agree upon certain 
definitions, and upon certain principles according to which 
you will handle or deal with your assumed concepts. Apply 
and check up results. Then apart from the possibility of 
everyone making the same error, you can say " within these 
limits, everyone capable of understanding and of ap- 
plying these concepts and principles, must reach the like 
results." Such truths may very acceptably be called uni- 
versal immutable truths. Pure mathematics and pure logic 
represent a body of such immutable truths. But in exactly 
the same way you can construct an eternal chemistry, an 
immutable physics, an unchangeable biology. The matter 
lies in your own hands. Choose and limit your physical and 
chemical concepts and principles of interaction, and deduce 
what results you can. Everyone capable of understanding 
your terms and principles can reach the same conclusions. 
Mathematics and logic representing as they do such abstract 
and general relations as those of space, time, number, simi- 
larity, and difference and thus so completely interwoven with 
every element of our experience, have validity and applic- 
ability in some sense to life and reality, because in fact they 
never get far from some aspect of the first elements of our 
experience. No one ever thinks of coining an immutable 
physics. That were only the play of fancy. If you could re- 
peat or give a new version of "Alice in Wonderland " it would 
be as eagerly read as is "Alice," usually, however, only for 
amusement purposes. The business of science is too pressing 
and serious for such pleasantries. And yet in the progress 
of science and knowledge you can see in abundance the equiv- 
alents of such fantastic creations. Every disintegrated 



ETHICS AND THEORIES OF PROPERTY 37 

theory or exploded hypothesis of past science is just such 
a creation. Concepts or principles taken from reality were 
fettered by supposed unchangeable limitations, and there 
resulted fanciful structures supposed to express reality in its 
fullness ; until reality arose as it were and in scorn gave them 
to annihilation. 

Thus science has learned caution. Evidently then these 
abstract immutabilities and eternities as ordinarily appealed 
to are of a difit'erent order from that of the steady generalities, 
of our scientific laws. Both are abstractions, but the limits 
are unlike. Every scientist of real power is ready to abandon 
every reigning theory in his department, if you can give him 
a better and more comprehensive one in its stead. And why? 
Because at bottom he recognizes from history, experience, 
and reflection, that real things and his abstractions differ. 
He knows that his abstractions are but partial aspects of 
real things. His constructions exhaust not a tittle of the 
reality; they are at best but a makeshift. The like follows 
for the divine conceived of as real. If real, it is as inexhaust- 
ible as any other real thing. Immutability exists only for ab- 
stractions, and of mere abstractions it is the immutability of 
death. Such immutability can never cover the variegated 
web of changing property relations. 

Wholly of the same piece as the above is the emptiness of 
absolute ethics, eternal right, justice, and goodness. Either 
these words when properly used mean to express a real 
content, or they are shells. If at any given time and place 
they have a content, then conditions and limitations are im- 
plied. Abolish the limitations, or change them noticeably, 
and then the content either becomes nonsense, or is unduly 
extended, or else its range of application is changed. Regard 
the limitations as unchangeable, and you find another shaky 
hypothesis, which the world outgrows. But as frequently 
employed in such discussions, these names are mere shells. 
Thus, merely for example, if in some Old Testament Jewish 
campaign, the Lord commanded the extermination of men, 
women, and children, your modern horror is met with the 



38 ETHICS AND ECONOMICS 

reply of a gradual progressive revelation and moral develop- 
ment. Right at that time even with a divine sanction is not 
right now. And Dr. Hyde, president of Oberlin College, 
can find the Deity of the savage to be the same as the Deity 
of the most refined culture of to-day, " differently conce'.vsd, 
but the same reality." Or you will meet the reply, " No 
matter how great the change, right is always right, justice 
is always justice, and so on. Now what is this other than 
clinging to the word, let the content be as variable as the 
shifting passions and interests of men? Of what use to 
appeal to the shell of the name, when the meaning has so 
completely altered or vanished? Absolute Deity can thus, 
with Dr. Hyde, cover contradictions, and absolute ethics can 
be made to contain impossible combinations. 

Absolute philosophers and theologians abound in such 
empty phrases. As type of them all : The Roman Catholic 
Church, popes, bishops, even the most docile and ignorant of 
the laity ceaselessly extol its changelessness of character, 
doctrines, and truths — this in the face of the open records of 
its histor}'-. For example : ' Man's physical necessity of food 
to support life becomes with it a divine revelation of private 
property, becomes a divine decree ; of these decrees the church 
is the guardian and interpreter, and hence the arbiter of gov- 
ernments, sciences, and morals.' (Leo XIII, Encyclical on 
Labor, 189L) Hence an " infallible " papal judgment con- 
cerning private property is to the faithful as divine as God 
himself. Thus this church sweeps external relations and its 
sectarian claims, objective impersonal science, subjective in- 
spirations, and partisan desires into one complex, and tenders 
whole and parts as of equal validity. Not to accept papal 
dicta is to defy God, to overturn society, " nay, the very notion 
of good and right would perish " (Leo XIII). But the 
changelessness of papal doctrines is merely the changeless- 
ness of the objective facts of science stretched illegitimately 
to cover all the elements of an opportune interpretation by the 
church, — this, together with the changelessness of the per- 
fectly natural purpose of the Roman hierarchy to maintain 



ETHICS AND THEORIES OF PROPERTY 39 

secure its position of influence and power, or else it is the 
changelessness of the written or spoken word alone. 

In general, the words carrying the " immutable " knowledge 
of the Deity and His purposes are found in " sacred books," 
(the Bible, the Koran, the Vedas, the Zend Avesta, the An- 
alects of Confucius, and so on). But the history of human 
ideas and culture, the evolution of religion, the development 
of sectarian doctrines dissipate all these clerical pretensions. 
God as a real being, — the knowledge of Him has unfolded as 
has the knowledge of all other external realities. The lan- 
guage of the sacred books is ever vague, general, an appeal 
to ideals — otherwise they had never found so universal a 
response — hence the inner meaning of the language alters 
with the growth of the believer's knowledge and ideals. Every 
discovery of science shapes anew some dogmatic interpretation 
of the Bible. The words are the same; the meaning is as 
variable as the inconstant forms of drifting vapors. The 
like may be said of the abstractions of the philosophers. (See 
" Origin of Ethical Finalities," Chap. VI.) 

Laveleye discussing in his " Primitive Property " the va- 
rious theories of property rights clearly sees and avoids this 
pitfall in one place, but his final refuge is of a like character. 
Laveleye will get away from such abstractions as the Roman 
jurists' " occupation," Rousseau's and Hobbes' " contract," 
but he adopts another of a similar nature. He says, "At each 
moment of history and in each society, men being what they 
are, there is a social and political organization which responds 
best to the rational needs of man, and which most favors his 
development. That order constitutes the empire of r'ght. 
Science is called upon to recognize it, and legislators to con- 
secrate it. Every law which conforms to that order is good, 
is just; every law which is contrary to it is bad, unjust." 
At first sight nothing finer than this seems possible. It 
breathes the air of realty, it is permeated with seemingly con- 
crete, particular relations of space and t'me ; it invo'^es 
science and legislation, and it recognizes men as motors and 
causes. It would appear well-nigh axiomatic and as nearly 



40 ETHICS AND ECONOMICS 

absolute as mathematics. Its greatest vice is that it implies 
an absoluteness not possible to it. On the one hand it dis- 
regards material and social limitations, or it regards as fixed 
other limitations, so that one almost certainly gives 
the idea an extension which history and life itself show 
is not and can not be borne out. Real relations and chang- 
ing real relations are transparently implied, and therefore 
also the changed content and sphere of the " Empire of 
Right." 

But such terms as " responds best to the rational needs of 
man," and "most favors his development" — what a complete 
nest of possible confusion lie in these words, when trans- 
ferred to particular cases! Grant them as general abstra- 
tions, who then shall tell what this " order " is, what is 
" best," what are " rational needs," the " needs " of what men? 
Of mankind's in general, or only those of a particular nation, 
or even of a particular class of a nation? And what is 
" favors," and " w"hose " development is favored, and develop- 
ment along what line, and for what period or length of time? 
And who shall decide the meaning of " best," and " best " 
in which direction, and who judges what are "rational needs?" 
Evidently here, in these seemingly simple words, is involved 
the seething turmoil of all interests and passions, all aspects 
of reason, development along all conceivable lines through all 
conceivable periods to all conceivable purposes to be realized. 
In truth one can not use such general language without im- 
plying some pretended final judge, some pretended final con- 
cept or test, some moment or period of time, some purpose to 
be realized. All this armory of presuppositions instantly calls 
out the questions, " Whence came you, what is your author'ty, 
your power, your test, and your titles?" Laveleye's fine 
phrasing gives no answer to these pertinent questions. He 
indicates no power., no test, no criteria. Now no one in fact 
has ever met with such final judges, and such final tests. 
The " Empire of Right " is a sonorous phrase, a glittering 
generalit}^, a fragmentary ideal seeking to make itself abso- 
lute. But social relations and even social ideals are too con- 



ETHICS AND THEORIES OF PROPERTY 41 

Crete, intricate, and transitory for sharply defined mathe- 
matical-like treatment. In reality, Laveleye's " rational needs 
of man " and so on, are only the needs and desires, the 
hopes and fears, of this or that fraction of society. We are 
as a historical fact thrown back upon the hosts of positive 
disputing interests, passions, persons, periods, purposes, and 
results. We are again in the welter of actual life, striving, 
fighting and blundering into such material cultural results as 
we may obtain. 

In truth Laveleye does almost what the Roman jurists did 
with " occupation." He schematizes a result, and by a feat 
of abstraction he places it as the presupposition of the his- 
torical course of events from which it actually issued. Or 
otherwise expressed — a more or less complete thought of a 
certain class of thinkers having or using certain tests or cri- 
teria at a certain period of time, he conceives in the form of 
a process of development of rational needs (" rational needs " 
according to their view), and he makes or would make this 
standardized thought of a partial result, the cause or prius 
of the process itself. The result is made to be its own cause 
and explainer. In spite of the turbulent crowd of real agents, 
of which he gives you a glimpse, he wishes to get behind or 
below these real though limited driving powers, and in his 
" right " as the sanction of law, ,he either forgets the limi- 
tations which alone guard the reality of his " right," or else 
he disregards the limitations and gives his judges, their tests, 
and their periods, a fixity and generality not belonging to 
them, or else, again, he is merely under the enchantment of 
a sonorous phrase, of a sounding shell. 

ULTRA-INDIVIDUALISM 

Recall the various theories of property. You see that some 
sort of clash between the individual and society finds expres- 
sion. Now one must come to some settlement about the 
priority of society and the individual, otherwise, he is the 
prey of illusions and of incomprehensible or unexpected lapses 
and relapses into various views. 



42 ETHICS AND ECONOMICS 

In some or all of the theories noted you find the individual 
man referred to or implied, but it is always the mature indi- 
vidual, and this mature individual always fronting other ma- 
ture individuals, or a society formed of such. Thus in prop- 
erty from occupation or seizure, in the social contract, in the 
right to work, in the dignity, worth, liberty, and rational 
development of man, — all these imply the mature individual as 
such, in his own nature as it were, quite apart from other in- 
dividuals, or from any social surroundings. A moment's 
earnest thought shows this view to be an abstraction, and an 
abstraction in the very act of striving (in the conclusions 
drawn from it) to get free from the conditions which give to it 
a relative validity ; or otherwise expressed, the conclusions 
themselves drawn from it imply the very relations which the 
abstraction seeks to escape. Thus, to take the last point 
first; the words worth, dignity, liberty, rational develop- 
ment, all imply that the abstracted individual has not escaped 
from a society real or conceived. These words have neither 
sense nor application apart from social relations. Cut a man 
off from all social connections whatsoever, real or implied, and 
he becomes in fact and in theory a thing. Worth, dignity, 
liberty, applied to such a being evaporate as meaningless. 
Liberty and rational development imply communion of like 
beings. Ethics, moral right and wrong are nothing apart 
from spiritual commerce. These terms used of the mere in- 
dividual are completely empty, they are not dead, they are 
nothing. Social relations are their very essence. Accord- 
ingly, an attempt to derive or found social concepts from or 
upon the concept of the mere individual as such seems a 
futility of the first order. No such mere individual has ever 
existed. The solitary Crusoe has not ceased to have social 
connection. His past can not be shaken oft; he remembers, 
he hopes, he creates in mind his own theater wherein he 
plays his part. Thinking for man is devoid of significant 
content apart from social communion real or implied. 

Test the abstraction of the absolute mature individual by 
reality, and he is seen never to have existed. At the very 



ETHICS AND THEORIES OF PROPERTY 43 

outset the mature individual apart from society is a biological 
and psychological impossibility. Genetic biology and psy- 
chology demonstrate this with such a wealth of detail that 
any other view of the matter becomes practically inconceiv- 
able. Before maturity he was a helpless infant. He did not 
come into being at all apart from a social relation, nor does 
he reach maturity apart from a thousand cares of others. 
The mature individual is therefore a product of social rela- 
tions. Every concept he has, whether concerning worth, 
dignity, freedom, reason, development, or what else — all 
spring from social connections. How, then, is it possible to 
imagine that such a being wholly the product of forces so- 
cially fused should ever be conceived to front society, and to 
lay down, as it were, the conditions which shall make social 
relations possible to him, which shall permit him to 
enter into social connections? A desperate mental abstrac- 
tion, which but repeats the substitution of product and pro- 
ducer. Even the conditions which he might be assumed to 
lay down are themselves for the most part the registered 
products of social relations. Thus the principles of contracts, 
the acquiescence in possession or seizure, the conditions of 
worth and dignity, are alive in his mind only because they 
there represent an image of previously established social 
results. Thus these theories repeat the familiar trick of sub- 
stituting effect for cause, of treating the final result as if it 
were a compelling purpose and power. Precisely as with the 
vague divine sanction, they repeat in disguised form the 
things to be explained, and set them forth as their own ex- 
plainers. A logical device or trick, valuable as an aid to 
learners, is regarded as the driving force which wrought out 
the reality. They are, as theories, inversions of fact and 
history. 

But even when these theorists of the naked individual are 
allowed some sway in applying their propositions, they soon 
fall into contradictions, or never advance farther than a high- 
sounding preamble. For manifestly these absolute rights of 
the individual as such must apply to each and every in- 



44 ETHICS AND ECONOMICS 

dividual, all must have these same indefeasible rights. One 
may well ask, what are these rights, and when or where were 
they ever indefeasible? Not to dwell upon the difficulties 
attending the passage from helpless infancy to maturity, and 
how these theorists shall determine the point of maturity, life 
and society plainly show that these fine theses are utterly 
false to historical and present facts. From a to z, present 
and historical societies in their actual relations dispute the 
propositions. Still more, these theorists can not advance 
more than a step beyond their preambles without encounter- 
ing social considerations. Almost immediately they swing 
in as final tests, social w^elfare, social utility, social worth, 
that is, human relations and human consequences. 

Thus take the right to life. This right, if any, must be pri- 
mary, since apart from life no rights have any meaning. Yet 
the right to life becomes a sort of nonsense, when posited of 
the isolated individual as such. Conceive a number of indi- 
viduals, isolated, desocialized; to them the right to life must 
be meaningless ; they are to one another no more than things. 
Each stands in his naked solitariness, in a universe of ex- 
ternal things. He uses these things as best he can for his 
maintenance. A human being is to him only as a wild beast 
or as a thing which may oppose his self-maintenance. In 
such a case right attaches to other humans just as little as 
it does to the waterfall or to the fruit found and consumed. 
If, however, you tacitly demand between the individuals a 
relation or connection of some sort other than that of ex- 
ternal things, then you have contradicted your hypothesis 
of the individual as such. If you insist upon the connection, 
then you give up the absoluteness of your individuals. You 
conceive them as socially limiting; in effect you are imme- 
diately back into the social forces which determine their 
actual subsisting relations. Your hypothesis thus fails of its 
purpose. What you have tried to do was to transfer a partial 
result which you approve of into the place of the cause. 
You have sought to make the product to be the cause, motive, 
and explanation of itself. 



ETHICS AND THEORIES OF PROPERTY 45 

But if we pass over such inner contradictions in the thesis 
itself, we find society itself at war with the doctrine. If the 
right to life be indefeasible, society may not guard itself 
by taking the life of a criminal. Self-preservation is no de- 
fense. Your life is worth no more than the other's. Casuis- 
try can not resolve the contradiction. And if neither society 
nor self-preservation may take the criminal's life, what shall 
we say of wars, especially holy wars ; what of " Te Deums " 
in praise of slaughter; of invoking the Deity to bless a 
national cause ; what of the praise of patriotism — " Sweet 
it is to die for fatherland , " what of the perfervid emo- 
tionalism, the moral and religious exaltation in fighting to 
death " for the right, for altars, homes, and consecrated sep- 
ulchers?" 'Tis a singular commentary on actual life. 

Further, how narrowly applied is the conception of the 
right to life. If life be so sacred, why confine the sacredness 
to human life? Why not apply it to animal life also, or why 
with the Buddhist confine it to animal life merely; why not 
extend it to vegetable life also? And to go back; 
what then of the divine Creator and man, when man can 
live only by destroying other life, or at least by transmuting 
other life into his own (advanced chemistry not yet having 
adequately solved its synthetic food problem) ? Evidently the 
thought attempting to be absolute falls into the necessity of 
limiting its scope. If so, the question again recurs, " What 
sets up the limits and how? " So that after all we must come 
back to concrete social determinants. 

Or apply the doctrine to property rights. Whether prop- 
erty rights be original and primitive, or secondary and de- 
rivative, so far as concerns the ultra-individualist all persons 
must possess the same right. No conceivable situation can 
arise which can defeat this right. Each individual is fully 
panoplied. He can be bound by no conventions, past, present 
or future. Anarchy is complete. Society is dissolved into 
separate isolated units. Thus " absolute rights " result in the 
annihilation of any and all really existent rights. Society at 
least has never sanctioned such conceptions. They are in 



46 ETHICS AND ECONOMICS 

fact the utter condemnation of all and every arrangement 
which societies large or small have ever instituted. Such a 
result, if logical, must surely presuppose some irrational 
premises. 

It would seem that this rather poor abstraction of the 
mature individual gets, after all, from social considerations, 
its semblance of workable content. It would seem worth but 
a moment's notice. But like the divine sanction, equally 
poor as an intellectual solvent, it is important only because 
of its perverted use. It is largely used as a shield in defense 
of existing institutions in their present form. One will in- 
voke the absolute right of the individual to property as a 
defense for his own property, and will tear a moral passion 
to tatters in such a cause ; but he quickly fails to see the logic 
that every man should then have property, that exclusion 
laws are immoral, that a heaping-up for the future is no 
valid defense against the present need of another. Society 
has hardly yet accepted condemnation for its utter failure 
to secure to every man sustenance, leisure, and a rational 
development. 

Or if, according to some of these assertors of an absolute 
property right, the right to property and sustenance — de- 
feated by our present laws in the majority of individuals — 
renders poor laws and legal bread lines obligatory upon so- 
ciety (surely an immensely curious conclusion), it is not 
easy to see why these theorists should not counsel the poor- 
law-bread-line recipients to luxuriate in the primitive property 
right rather than to suffer miserably upon the poor-law-bread- 
line derivative. Could antic ever be more comical — pity, the 
dark, tragic background. The theorist of the absolute right 
of the individual to property sees social arrangement shut 
out a mass from the banquet of life — this property right 
violated, — yet in the name of this same outraged right he 
obligates society to maintain poorhouses, poor laws, and 
bread lines, while in many cases the granaries of society are 
bursting. How the gods of Epicurus must laugh ! How 
old Puck must hoho — " What fools these mortals be ! " 



ETHICS AND THEORIES OF PROPERTY 47 

Roman Catholic divines (Leo XIII, Vaughan, Cathrein) 
maintain the justice of this situation by claiming for every 
individual the abstract right to hold property; an empty form 
they concede it to be, if there be no possession. But they do 
not make clear except by recommending that the present rich 
be charitable, nor can they make clear, how any one of the 
huge majority is to realize, to fill up, his empty abstract right 
save in conjunction with exploitation active or passive, when 
all the natural sources of production have been pre-empted. 
They do indeed theoretically concede the power of society 
to limit the fact of possession, but neither Leo XIII nor his 
expounders take notice that if from the abstract medieval 
world of an Aquinas to whom they appeal, the question be 
transferred to the concrete complex world of to-day, either 
their medieval individualistic world (long since really ex- 
tinct) must completely rupture, or else even its merely 
shadowy image can maintain itself only when conjoined with 
exploitation. (See Chaps. Ill, IV, V.) 

EGOISM AND ALTRUISM 

Merely a word or two upon another point, upon egoism and 
altruism, upon selfishness and sympathy. Our whole social 
economic structure rests theoretically upon the appeal to the 
selfish, while, in fact, as we have in effect just seen, the whole 
man is pre-eminently social in origin. Both his physical and 
mental make-up are social products. Desocialize a man and 
he ceases to be anything human; he becomes a mere thing. 
This consideration theoretically abolishes the naked selfish- 
ness of individualistic economics. It is a call to reconsider 
the abstraction of the economic man. On the other hand, 
the mental, moral, and spiritual quality of the individual 
counts in the qualities of the social organism. There must 
be some sort of adjustment of the claims of the individual as 
individual with the claims of society, and the question arises 
how and who determines the range and limits of the fusion 
of the two principles. It is certain that no man can live to 
himself alone. He can no more do without some society than 



48 ETHICS AND ECONOMICS 

some society can do without him. Each needs the other. 
Thus, then, we find ourselves again thrust back to concrete 
social forces and classes which measure out these principles 
and their relations. 

Ever the reformer toils and moils to direct the course of the 
unwieldy social bulk. Often, all too evidently, in vain. The 
grooves of its movements are deeply worn. The parts, be- 
cause of inertia of mind and habit, fit too closely to the path- 
ways. The prevalent means and methods of production and 
distribution generate mass opinions and sentiments not 
readily modified or overborne. The average individual is 
insignificant over against the whole. But so important is 
initiative and individuality that the ideal need arises to secure 
a social constitution which shall destroy that individuality as 
little as possible. Approximate equality the test, then the 
mass must rise to higher and higher levels. One part at least 
of an ideal goal is an economic status for all in which each 
may fairly try to unfold his highest possibilities, subject 
always, however, to the social obligations which alone con- 
stitute his ultimate foundations. 

CLASS STRUGGLE AND CLASS CONSCIOUSNESS 

The goal of this discussion of property and theories of 
property can be nothing else than to get sight of those forces 
which, however disguised, are after all the makers, de- 
terminers, and sanctioners, not merely of property rights, but 
of rights in general, of ethics, of legislation, of social, political, 
and economic organizations. We want to know the causes, the 
moving powers, the relatively final generators and controllers 
of the vast and varied phenomena of which property is but 
a part expression. 

In the various theories noted, one finds various hints crop- 
ping out in this direction. The words origin, cause, foun- 
dation, sanction, as applied to property and to right in gen- 
eral, all ,have so varied and ambiguous a meaning that con- 
fusion must and does arise. Thus, one theorist says " Law 
makes right and justice," while another says " Right makes 



ETHICS AND THEORIES OF PROPERTY 49 

law or is the sanction of law." Others again talk of the 
" higher law," or take refuge in the divine. Still others ap- 
peal to physical force socially applied, others, again, invoke 
economic necessities. Each makes out a plausible case. The 
result is cause and consequence are completely confused in 
a mind endeavoring uncritically to hold all together; system- 
atized results get to appear as causes or sanctions; abstract 
generalities are made to function as independent real things; 
relatively concrete generalizations are torn from their limita- 
tions and are made to appear more complete and general than 
they should. Thus in seizure, occupation, or possession, an 
actual fact socially accepted under certain conditions is torn 
loose from these conditions and is made to apply generally. 
This attempt contains almost every vicious procedure in- 
dicated above. You have the mature individual, absolute 
right, selfishness and what else treated as completely real. 
A non-social act is transferred to social relations as if these 
were wholly of a piece. And if law and society should accept 
and validate such an act, the act is said to sanction the law 
as being right. In fact, however, society was before the act 
of appropriation. Society permitted the appropriation and 
thus made the act right, that is, acceptable at that time and 
place. 

The fantasy of the original social contract contains all 
these vices. It assumes mature individuals, absolute in- 
dividual rights, and so forth. What it does, is to group 
together actual, relatively stable phenomena and relations, 
and conceiying them as an independent whole it then thrusts 
the concept back into the past as the causal motor of the 
course of development. Or it conceives the product of a 
social evolution as the conscious purpose or idea which guided 
the evolution. It attributes to past ages and peoples ideals 
which they never dreamed of; and thus in criticizing any 
past society, it really constitutes its own test as final, and 
assigns as motives to previous peoples thoughts which they 
never entertained. It follows from this, that it fails to con- 
ceive the evolution aright, and that therefore it misses in 



50 ETHICS AND ECONOMICS 

much the real agents and their actual motives. Similarly, 
labor as primitive source of property right may be too vaguely 
handled. Only, of course, the labor idea is getting closer to 
real causal factors. 

Again, in law and the state we are getting closer and closer 
to real things. Law and government throb with life. The 
real agents are but thinly veiled. The chief error is that these 
forms suffused with reality are treated as the primary agents. 
The product is taken as the producer, the garment is put in 
place of the man. The vice is that seen before, though not 
so gross, the vice of treating an abstraction as a complete 
real. 

For law, governmental forms, " social contracts," rights of 
possession, do but express the wills, interests, passions, judg- 
ments, and ideals of actual human beings. Behind all re- 
ligions, ethics, legislations, and governments, have stood red- 
blooded men and women driving through as best they could 
their judgments, ideals, passions, and interests. No legis- 
lation, no ethical system was ever an independent self-evolv- 
ing entity. They are all the product of man in social rela- 
tions. He is their cause and sanction. No matter how much 
each passing man is constrained and molded by surrounding 
social relations and ideals, he is still with his passions and 
powers the constant re-creator of the existing social con- 
ditions ; no fiat of his " pure reason " can shake him loose 
from his physical and physiological bonds. His social con- 
ditions he passes down the stream of time in much the same 
manner and by the same methods whereby they came to him. 
As he is the constant re-creator of society, it is m5.nifest how 
a variation in his and his fellows' purposes and powers causes 
a change in social and ethical concepts. The fantastic idea 
of the self-evolution of a ghostly abstraction gives way to the 
perception of the fighting, loving, lusting men and women at 
once the cause and the product of social connections. Any 
view that does not again and again touch, Antaeus-like, the 
earth of actual social relations is certain to lose force and 
vitality. In time it diverges with its fixity more and more 



ETHICS AND THEORIES OF PROPERTY 51 

from the changing reality; more and more it becomes an 
attempt to substitute the part for the whole, or to make an 
abstraction play the part of a full reality. 

Man, himself, then, is the motor and the moved. Laws, 
ethics, politics are his product. He is their cause and their 
sanction. His ideals, passions, and interests are the sub- 
jective motors. All the theories noted contain this truth 
however disguised. History demonstrates it. Life itself as 
it strikes upon us through others is an ever-present witness. 
Moreover, it is living man who is this cause and sanction of 
the laws, ethics, and policy of this or that particular existing 
society. Rooted he may be in the past; but this only means 
that present man re-creates the past in and by his present 
constitution. Reaching out he may be into the future; this 
only means that present man has certain purposes, which he 
seeks to realize. In each society progressives and conserva- 
tives fiight out their battles; changing institutions reg- 
ister the results of the clash of living forces. To the pro- 
gressive, the conservative represents a dead or dying ab- 
straction; to the conservative, the progressive represents 
another hallucination seeking to replace " the tried and true.'* 
Always, however, the active powers concerned are the 
emotions, judgments, passions, and interests of present 
blooded men. 

Now this hot-blooded man is an extraordinary multiplex of 
qualities. As stress is thrown upon this or that facet, a 
seemingly different theory emerges. For many purposes, man 
presents a broad dualism; he is spiritual and physical, and 
the question now is, which of these two sides is, as it were, 
the long-run dominator. This question must be grasped, 
for only by understanding it can we measure the relative 
value and force of the various sanctions ; only thus perceive 
why and how far a man can appeal to ethical, material, and 
economic motives. 

The appeal must be to present man, a complex of mind and 
body. Mind apart from body is not yet known. Disem- 
bodied spirits exist as yet only in tales. It follows then that 



52 ETHICS AND ECONOMICS 

such doctrinaires who base their theories on the super-earthly, 
on angelic natures, or disembodied minds — transcendentalists, 
spiritualists, metaphysical theologians, can not pass muster 
for a scientific account within the range of workable human 
knowledge. Notice again, this is not a denial of these other 
aspects and possibilities. It has nothing to do with a future 
ultra-mundane life. It simply insists that until these other 
phases submit to verifiable presentation and experience, they 
shall not obtrude themselves as intellectual factors. Faith 
and the heart shall not usurp the functions of reason and 
the head. As little on the other side shall the corporeal assume 
to displace all ethical and emotional aspects of man. The 
emotions are just as real as the intellect, perhaps in one 
sense more real. A solution for the head can not therefore 
neglect to consider the heart among real factors. 

So then we come to the economic conception of the mat- 
ter. Economic considerations are the long-run determiners 
of human destinies. Man is moved by many impulses and 
motives, physical, mental, and spiritual. Each of these has 
more or less an economic aspect, and it is this economic 
aspect which in the long run controls and molds a situation. 

First of all is the instinct of mere physical existence. What 
will not a man give merely to preserve alive this mixed state 
of soul and body? Self-preservation is life's first law. De- 
viations from this are often held to be prima facie evidence 
of insanity. The law is registered in every cell, bone, and 
muscle of our bodies. Every start at danger, every instinc- 
tive instant withdrawal from pain, every attitude of offense, 
of defense, taken without apparent pause for thought — all 
are incarnations of the law of the survival of the fittest. The 
entire animal and vegetable worlds present like phenomena. 

After the preservation of life comes the impulse and strug- 
gle to increase its range of power and enjoyment. The pres- 
ervation of life, its increase in range of power and enjoyment, 
these seem to be the most widely diffused human demands. 

But this means at bottom increased production and control, 
direct and indirect, of material goods. Culture, heightened 



ETHICS AND THEORIES OF PROPERTY 53 

life means an increase first of food, raiment, shelter, and then 
of all the material foundations of spiritual life, books, arts, 
society, social conveniences. Apart from these culture is a mere 
word, corresponding to nothing real. Close your eyes as you 
will, spiritual culture can not arise apart from a storing-up 
of the results of increased material production. A Tolstoy 
could never have run the gamut of ethical and religious ec- 
centricity, and finally have imagined himself to be a special 
medium to transmit the divine influence, had not the world 
for ages heaped up a mass of material goods. Life, then, 
and increase in its range and power, are the constant human 
demands. At all events, the mass of life before us, and the 
pages of history disclose that these are the great quests. But 
just these in their totality constitute what is called the eco- 
nomic forces of society. Accordingly, the mass of social re- 
lations is but the expression of economic power. 

Life first, and then some range of freedom, power, and op- 
portunity, must exist before ideals of culture can arise. The re- 
alization of these ideals is so straightly bound to physical and 
physiological needs, that it may be truly said spiritual culture 
itself can at bottom be only transformed or transfigured 
economics. In the very first human experience are wrapped 
up sense, desire, emotion, fancy, and imagination. Spiritual 
culture but seeks to widen, deepen, and refine into longer- 
during, more exquisite enjoyments the first cruder manifesta- 
tions. It never can and never does seek, except fitfully, to 
break the bonds of life or to dry up the wellsprings of en- 
joyment. It must certainly in this life ever bottom upon 
external material relations. Indeed, close inspection will 
show how diversely, how seductively the economic can and 
does disguise itself in all other forms, ethics, divinity, 
charity, sympathy. Often in all these the economic masque- 
rades, ashamed of its origin, denying itself, and yet in this 
very denial a plain liar at last. 

The economic in widening its horizon takes on more and 
more the aspect which we call ethical. At one time, it is 
starkly personal or tribal, frankly and savagely selfish. As 



54 ETHICS AND ECONOMICS 

teason develops in wider experience, the economic becomes 
wide-ranging, considerate of others, reaching over la ge 
spaces and distant times. It enshrines itself more or less 
nakedly in laws and politics, more or less selfish, more or less 
beneficial. It generates ideals; larger experience demon- 
strates the solidarity of the race; from this vision, man rises 
above the brutally selfish; ethics are born. Thus, then, in 
vast part, laws, politics, and ethics are simply transformed 
economics. 

In this seething aggregation of socialized individuals all 
sorts of powers and qualities characterize the various persons. 
All sorts of interests, all degrees of farsightedness exist — 
all sorts of bonds of sympath)' are found. Hence again all 
sorts of classes arise and all sorts of clonflicts, class conflicts, 
individual conflicts, individuals against classes and against 
social regulation; from which spring fines, prisons, jails, 
political parties, social contests, civic broils, international 
wars, and rumors of wars, — in two words, you have Marx's 
class struggles, real men and women, under what banners 
and with what fantastic devices you will, putting through 
into law and ethics their economic ideals. 

With these genuine fighters, contrast the bloodless abstrac- 
tions of absolute impersonal ideals. Ethical development, 
the unfoldment of reason toward perfection, what figure do 
these concepts present, conceived of as self unf _ld'ng realiti s? 
Are these the real, and the passionate men and women the 
shadow puppets of their inner development? How many per- 
sons do you find in any age or generation who give themselves 
up devotedly to the cultivation of pure reason, of pure ethics? 
What a minority, pitiable in numbers. And yet, look at t^^ese 
through the lapse of ages, and you can see every one of them 
the prisoner of the time-spirit of his century, who reads into 
seemingly impersonal general formulae the dominant eco- 
nomic ideas and needs of his times. Aristotle and Plato, 
living on the sweat of slaves, could not conceive a society 
without slavery — slavery was therefore right — nor of man- 
ual work as other than degrading. A churchly Aquinas amid 



ETHICS AND THEORIES OF PROPERTY 55 

a victorious papal age bends all science and learning to give 
theology that is, the church, a predominance in theory and 
science, such as the church had in reality. A Jewish Maimon- 
ides could not escape the influence of his oppressed religion nor 
the religio-economic pride of his priestly class. A Kant, a 
Rousseau, a Fichte, a Plegel, a Spencer record in abstract 
seemingly absolute terms, ghostly adumbrations of the eco- 
nomic statics and dynamics of their times. To-day thousands 
are philandering with Socialism and Christianity, reading 
the one into the other and vice versa. In all these idealistic 
theories you have partial abstractions seeking to represent 
themselves as independent wholes. Behind these all, the sub- 
stance of them all, you find real men in the throes of 
class struggles. 

There can be no honest denial of the relative efficacy in 
numberless individuals of the range and power of the so- 
called purely ethical and purely spiritual. Thousands and 
thousands of acts every day testify that the whollv selfish, 
completely unsympathetic, merely animal individualism can 
not and does not compass the range of human life and it.? 
manifestations. The economic is not identical with the 
purely selfish. The two are not to be confused. We have 
indicated how the ethical grows out of a wiser economic. 
As altruists we may rejoice that the economic widens beyond 
the nakedly selfish, and that thus even the nakedly selfish 
man must pursue a policy which in the long run does not 
outwardly differ from the so-called purely ethical. Thus, 
man, with widening intelligence and widening power through 
the solidarity of class and other interests, forces egoism to 
yield the fruits of considerate altruism and love. 

Accordingly, then, with property as a social possession and 
power, — as its origin lies in society and class struggles, so 
its course of development and its future changes rest in the 
same powerful grasp. It will become what the clash of in- 
terests in the struggles of classes makes it become. There is 
no finality about its present status ; there can be none. No 
human power can, and judging from the past, no divine power 



56 ETHICS AND ECONOMICS 

will ever say of it : — " Your course of development is closed, 
thus far shall you go and no farther." 

From the foregoing the following is evident. Property 
relations, tribal, communal, and private have undergone in- 
numerable changes in the past. These changes were brought 
about by the changing views and economic relations of men 
with power to eflrect their desires. Changes brought on eco- 
nomic and social results; these results in turn generated new 
classes and additional struggles. This was the history of 
the past. The same forces work to-day. The like is to be 
expected of the future. Phrase it as you please in religious, 
ethical, juristic, or cultural garbs, these motives simply can 
not separate themselves from economic needs. Indeed, they 
may be regarded, in part at least, as extensions of the eco- 
nomic. At first, protoman and the primitive savage, though 
social in origin, could see only from the nakedest self-preser- 
vation view-point. The ages have taught man his dependence 
upon his fellow. His own selfish ends are even now best 
conserved in the long run by a considerate regard for his 
companions. This permits the development of altruistic 
views, which, like all other concepts, may be so abstractly 
regarded as to land in the realm of dreams. But with all that, 
advance has been purchased at no other price. It follows 
further, if any change is to occur in the production, or 
especially in the distribution of those goods we call property, 
this change can occur only from power. If, for example, the 
Socialists' demand be ever realized, that can come only from 
the intelligent use of power. If the workers feel themselves 
unjustly treated, the cure lies in their own hands. They 
must appropriate power, and having appropriated it, they 
must maintain it. Power will never come to them as a 
gift. When they shall have learned to take, to hold, and 
to keep, then it is theirs. And when that time comes, it 
will still be superior power and intelligence in the seats of 
the mighty. 



CHAPTER III 

ETHICS AND PRODUCTIVITY THEORIES OF INTEREST 

Seeming Sterility op Ethical Systems; Changing Content of Ethical 
Concepts; Economics as Cause; Ethics as Ideals.— Claek'b 
Ethical Problem; Quotations.— Clark's Economic Problem; 
Definitions and Assumfiions: Pure Labor; Pure Capital! 
Enterprizek; Static State; Natural Law of Distribution. — Clark's 
Solution: Independent Producer; Farm Illustration; In- 
dustrial World; Economic Causation; Locating the Marginal 
Points.- Pure Science Problems. — Examination. I. Economic Con- 
fusions: Physical Causation and Social Division; Mathe.matical, 
Economic Causation; Psychological, Perfect Competition and 
Real Life; Legal Necessity and Real Necessity; Ethical and 
Religious Finalities; Static State and Actual Society. II. Ethical 
Confusion, Imputation versus Creation: Language Substitutions; 
Farm Illustration; Primitive Economy; Machine Ethics; Absolute 
Rights Illusion; Human Sympathies; Muddled Expressions op 
Economists; Private Property; Inheritances; No Expropriation; 
Man versus Machine, Beaulieu; Natural Decay of Capital. III. 
Interest and Institutional Robbery: Clark's Static State Is In- 
stitutional; Test, Creative Contribution; Pure Capitalist No 
Creator; Labor Without Capttal, Unproductive; Social Spenders; 
Interest Necessary to Production; Enterprizer and Pure Capi- 
talist; Static Labor State; Property, a Stimulus to Crime. IV. 
Ethical Purification By Functional Distribution: Purification 
By Abstraction, By Mathematical Averages; Real Forces; Answer 
of History; Suicide OF Enterprizer. — Conclusion: Clark's Ethics 
Relative, Economic In Foundation, and Transitory. 

Ethical, religious, or broadly speaking, philosophical ques- 
tions differ greatly in one respect from questions of purely- 
materialistic science. An objective scientific problem once 
solved tends more or less to remain solved, and at the same 
time to furnish a foothold, as it were, for further advance. 
Succeeding scientists push their inquiries into other fields. 
They glean new truths, perhaps recast the form of expressing 

57 



58 ETHICS AND ECONOMICS 

or representing the old, as in the Copernican substitute for 
the Ptolemaic astronomy, but always they are on the advance. 
Their impersonal objective tests and modes of verification 
are perhaps the secret of the firmness of their grip and of the 
steadfastness of their results. On the other hand ethics, re- 
ligion, and in general, philosophy seem to thresh over end- 
lessly the same old problems. Aristotle's Nichomachean Ethics 
of 300 B. C. and an up-to-date treatise on Moral Philosophy 
contain the same topics, the same nomenclature, and similar 
methods of treatment. So much alike are the surface ap- 
pearances, and so many and keen have the minds been which 
have discussed these matters, that to some the whole subject 
of general philosophy, as it may be called, seems utterly 
sterile. Its problems, whether ethical, religious, or meta- 
physical, appear to be quite insoluble, or any given solution 
is hardly framed before it in turn begins to split into pieces. 
Progress in these fields seems a word of unknown meaning 
or application. Again and again however the human mind 
returns to these unsettled questions. Why then this per- 
petual round? Are these problems really independent and 
insoluble, or are they after all to be conceived, not as inde- 
pendent in origin, but rather as the reflection of other dom- 
inating elements? Though in ethics for example one finds 
the same general terminology, one finds also the content or 
ideas expressed by the words to be constantly changing. If 
ethical problems were independent and objective in the 
sense in which the problems of physical and mathematical 
science are objective, so much concentrated thinking as has 
been put upon them should ere this have yielded some toler- 
ably steadfast solutions. If however they are for the most 
part only reflections from other and changeable elements, one 
can understand not only the change in their content, though 
their language be the same, but also their perennial interest. 
The question then must quickly follow : — Are these sub- 
jects of thought after all really independent, and if not, what 
are the foundation and the motor elements from which they 
derive their continuous life? 



CLARK'S PRODUCTIVITY THEORY 59 

Karl Marx, the Socialistic economist and philosopher, and 
Frederich Engels, his friend and co-worker, expressed the 
thought that economics, the mode of the production and dis- 
tribution of material goods, is the controlling factor in scciil 
evolution. Economics determine consciousness in general. 
As a result ethics are forever attractive, because of the prac- 
tical interests lying at their base. Ceaselessly ethics change 
or ethical solutions split asunder, because practical relations 
in the mode of economic production are changing ceaselessly. 
A new tool, machine, raw ma erial, or process, has a far reach- 
ing influence ; it alters the economic status of this or that set 
of persons. This alteration of status reflects itself in 
changed concepts of good and of right. 

Ethics, as they often meet us, take on the form of ideals. 
They come to us as commands. They wrap themselves in 
the garments of absolute truths, eternal rights, inextinguish- 
able privileges, powers, and duties. They demand acceptance, 
submission, reverence, devotion. They claim the right to 
control all other human thoughts and activity, and therefore 
the right to dictate economic relations. They thus out- 
wardly appear more the creator of economic connections than 
the idealized reflex of material and social conditions. These 
claims of ethics we have all heard so often and so long that 
more or less instinctively we respond to them. They have 
been drilled into us from our birth. Every day of our life 
is a training in them, especially in our earlier years when 
social education in family, racial, national, and class relation- 
ships is liveliest, and critical faculty is weakest. Hence our 
almost instant response to invocations to liberty, to right, 
to nationality, to local pride. The tom-tom orator who 
thumps the drum of a " square deal," provided only he be 
shrewd enough not to overdo, is sure to find a large, en- 
thusiastic, but rather blind following. We are thus between 
two fires if both Marx and our social instincts be right, hard 
economics on one side, and passionate idealism on the other. 
It is however our present purpose to try to show that after 
all there is no such chasm between economics and ethics as 



60 ETHICS AND ECONOMICS 

is implied above; rather that in real life it is practically im- 
possible to sever the two. 

In view of this close connection between economics and 
ethics, it is not surprising to find that Prof. John B. Clark of 
Columbia University, in his " Distribution of Wealth," 1902, 
an " epoch-making " work according to some colleagues, rep- 
resents ethics to be a driving motive of his economic dis- 
cussion. Though his treatise is strictly economic, he is not 
satisfied to trace out as a specific science problem the forces 
or processes of distribution under existing conditions and to 
formulate them in laws. It almost appears that the ethical 
side of the problem is for him the more important. Not merely 
would he make plain the distributive processes and their 
laws, he would also have us infer their ethical sweetness and 
purity. (" The Distribution of Wealth ; " Pref. and Chap. I.) 

CLARK'S ETHICAL PROBLEM 

On page 3 of his book he says: " * * * the natural 
law of distribution * * * more hinges on the truth 
of it, than any introductory words can state. The 
right of society to exist in its present form, and 
the probability that it will continue so to exist, are 
at stake. These facts lend to this problem of distri- 
bution its measurless importance." On page 5 he says: 
** The right of the present social system to exist at all depends 
upon its honesty, but the expediency of letting it develop in its 
own way depends entirely upon its beneficence. We, there- 
fore, need first to know whether we have the right to let 
natural economic forces work as they are doing; and we 
need next to know whether, on grounds of utility, it is wise 
to let them work thus." On page 7 he tells us : " Rights 
are always personal; and only a sentient being has claims, 
as only an intelligent being has duties. * * * There is, 
then, no issue of right or wrong that wages as such fall from 
a dollar and a half a day to a dollar; but the taking of a half- 
dollar from the daily pay of each member of a force of men, 
and the adding of it to the gains of an employer raises be- 



CLARK'S PRODUCTIVITY THEORY 61 

tween the parties a critical issue of justice or injustice. The 
question is : Has the employer taken something that the laborer 
has produced? Exactly this issue is forever pending between 
industrial classes. Every day, a definite amount is handed 
over by one class to another. Is this amount determined by 
a principle that humanity can approve and perpetuate? * * * 
If each productive function is paid according to the amount of 
its product, then each man gets w^hat he himself produces. If 
he works, he gets what he creates by working ; if he also pro- 
vides capital, he gets what his capital produces; and if, 
further, he renders services by co-ordinating labor and capital, 
he gets the product that can be separately traced to that 
function." 

On page 8; " * * * We might raise the question 
whether a rule that gives to each man his product 
is, in the highest sense, just." * * * "It [the rule 
of certain socialists, ' work according to ability and 
pay according to need '] would violate what is or- 
dinarily regarded as property right. The entire ques- 
tion whether this [property right or above rule?] is just 
or not, lies outside of our inquiry, for it is a matter of pure 
ethics. [Query, what are the pure ethics of property?] Be- 
fore us, on the other .hand, is a problem of economic fact. 
Does natural distribution identify men's products and their 
gains? Is that which we get and which the civil law enables 
us to keep really our own property by right of creation? Do 
our actual estates rest from their very beginnings on 
production? " 

On page 9: " * * * A plan of living that should force 
men to leave in their employers' hands anything that by right 
of creation is theirs, would be institutional robbery — 
a legally established violation of the principle on which 
property is supposed to rest. * * * jf ^-^g i^^ on 
which property is supposed to rest — the rule, ' to 
each what be creates' — actually works at the point 
where the possession of property begins, in the pay- 
ments that are made in the mill, etc., for values there 



62 ETHICS AND ECONOMICS 

created, it remains for practical men so to perfect the indus- 
trial system after its kind, that exceptions to this prevalent 
rule may be less frequent and less considerable. We can deal 
otherwise with robberies that are not institutional; but it is 
evident that a society in which property is made to rest on 
the claim of a producer to what he creates must, as a general 
rule, vindicate the right at the point where titles originate, 
that is, in the payments that are made for labor. If it were 
to do otherwise, there would be at the foundation of the 
social structure, an explosive element which sooner or later 
would destroy it. For nothing, if not to protect property, 
does the state exist. Hence, a state which should force a 
workman to leave behind him in the mill, property that was 
his by the right of creation, would fail at a critical point. 
* * * Property is protected at the point of its origin, 
if actual wages are the whole product of labor, if interest is 
the product of capital, and if profit is the product of a co-ordi- 
nating act," 

The foregoing extracts plainly enough tell us that Prof. 
Clark's economic campaign is also an ethical engagement. 
He takes upon himself to issue under the banner of ethics a 
defense of our present industrial society. We are interested 
in this knightly enterprise of Prof. Clark, not mostly from 
the economic side, nor from the merely ethical side. We 
wish rather to present it as " Exhibit A," how economics gets 
itself transfigured into ethics; how a scientific so'ut'on of a 
scientific problem within certain limitations manages to cut 
loose from those limitations; and in particular, how partial 
ethical ideals appealing to a more or less limited number or 
class strut about in forms of generality and of universal 
validity not properly their own. 

Apparently Prof. Clark's elh"cal defense of our present in- 
dustrial society rests mainly upon the following propositions: 
(a) An "honest" division of an economic product must be 
in proportion to the " creative " contribution of each of the 
combined elements, (b) Present society through " a natural 
law of distribution " tends to realize more or less this division 



CLARK'S PRODUCTIVITY THEORY 6^ 

according to creative contribution, (c) This " natural law 
of distribution " is an expression of natural forces common 
to all social forms and institutions. It is therefore in a proper 
sense extra-institutional and therefore (d) our present society 
is not " institutional robbery." 

In general it will be noticed that propositions (a) and (b) 
constitute a nice attempt to blow up with its own petard the 
socialistic charge of exploitation. The socialist makes and 
reiterates the demand that labor shall receive its full product, 
and protests that in fact the worker is deprived of a greatar 
or less part of what is his due. Clark practically replies in 
his book that the actual wages paid do represent that full 
product, and hence the exploitation theory is not sustain- 
able. Proposition (c), which places the problem of the 
division of a product outside of institutions, lays a foundation 
for those inalienable and indefeasible rights of which for ages 
authors have made so much. 

Prof, Clark tells us that " the majority of men live chiefly 
by labor." A mass of wealth is continuously piling up in 
society. More could be piled up, if even the present pro- 
ductive powers were let completely loose. And still more 
might be accomplished by improving productive instruments, 
if proper opportunit)'" and motives were given. At one ex- 
treme of society we have lords, ladies, millionaires, captains 
of industry; profusion, almost limitless abundance, and an 
astounding prodigality. At the other extreme is poverty, 
destitution, degradation, crime, millions of unemployed, and 
** the submerged tenth." " Nine-tenths of the wealth of the 
United States is owned by less than one-tenth of the popu- 
lation." Similar figures exist for Germany, Great Britain, 
and France. Such glaring contrasts, — some say the most 
glaring the world has ever seen, — start questions. The great 
question is whether the majority of men living chi fl/ by labor 
are defrauded or not of what they create ; not merely whether 
here and there some are cheated by this or that employer, 
but whether society by its very institutions does not accom- 
plish this act of fraud. In the face of the violent contrast 



64 ETHICS AND ECONOMICS 

indicated above, Prof. Clark undertakes to demonstrate scien- 
tifically that present society tends to give to labor all that 
it creates, to capital all that it creates, to the organizer of in- 
dustry all that he creates. Exploitation, dread word, name 
indicating an " explosive element at the foundation of the 
social structure," tends everywhere to disappear. " God's in 
His heaven — All's right with the world!" 

CLARK'S ECONOMIC PROBLEM AND SOLUTION 

On page 5 he says : — " The whole income of the world 
is of course distributed among all the persons in the world, 
but the science of distribution does not directly determine 
what each person shall get. Personal sharing results from 
another kind of sharing; only the resolving of the total in- 
come of society into wages, interest, and profits as distinct 
kinds of income, falls directly and entirely within the field 
of economics. Each of these shares is unlike the others in 
kind since it has a different origin. One comes from per- 
forming work, one from furnishing capital, and one from co- 
ordinating these two agents. * * * What we wish to 
ascertain is solely what fixes the rate of wages as such, and 
what fixes the rates of pure interest, and of net profits as 
such. * * * What is beyond his [any man's] control, 
and fixed by a general and purely economic law, is the de- 
termination of the product that labor and capital in them- 
selves can create and ultimately get." 

" We are then to seek only to discover the forces that fix 
the amounts of the three kinds of income." In pursuit of 
this quest, Prof. Clark traverses some 442 pages. There are 
definitions and distinctions galore. We have the " static 
state," " heroically imaginative ; " we have labor, pure labor, 
units of social labor; capital, capital goods, pure capital; 
wages, interest, rent, profits, value ; marginal efficiency of 
consumers' wealth, of producers' wealth ; final increments, 
laws of final utility ; final productivity, economic causation, 
perfect competition, and so on ; in fact a perfect network of 
abstractions carefully, planfully woven and handled with 



CLARK'S PRODUCTIVITY THEORY 65 

great dexterity. It is neither necessary nor desirable for 
present purposes to follow Prof. Clark along all his threads, 
since we are concerned not so much with his economics as 
such, as with the economic basis of his ethics; we must how- 
ever seek to give the spirit at least of some of his fundamental 
definitions and assumptions in order to estimate the ethical 
result. 

It was implied above that labor, capital, and the enter- 
prizer's skill entered into a combination and created a prod- 
uct. Labor enters the combination, bare and " empty- 
handed;" — properly without any tools, instruments or cap- 
ital whatsoever, pure labor power, nothing more, nothing 
less ; a kind of force or energy incorporated, it is true, in a 
human sensitive body, but for productive purposes an element 
of force wholly for the period of production at the disposal of 
some one other than the worker himself. Indeed so ab- 
stractly must this labor power be taken that it must be con- 
ceived of as independent of this or that laborer. It flies with 
perfect celerity from one body to another body. The laborer 
sickens or dies ; the labor pov/er represented by him instantly 
and perfectly migrates to another human body. The in- 
dividual worker is nothing; his labor power is the only sig- 
nificant thing about him. In short labor power is treated 
purely abstractly, just as is gravitation or other physical 
forces representable by an algebraic formula. 

Similarly capital, represented by tools, instruments, ma- 
chines, land, money, is properly the force or power incorpo- 
rated in lands, houses, m.lls, machinery, raw material, money, 
finished products so far as these when disposed of are turned 
back (in values) into the productive process. In short, ab- 
stractly considered, material force apart from human labor 
force, no matter in what forms it may be represented, is 
capital power. It too is like labor power perfectly abstract. 
It flies from machine to machine. A machine, as it wears 
out, virtually creates another machine. No capital power 
apart from disasters is lost. The power represented by a 
machine half-used-up is supplemented by that in the half- 



66 ETHICS AND ECONOMICS 

created machine. The total power is the same as when the 
first machine began its first productive movement. Pure cap- 
ital power is a pure abstraction, or if you will, it is a power 
treated purely abstractly. 

The enterprizer, the captain of industry, is he who com- 
bines or organizes the two agents, pure labor and pure cap- 
ital, and directs the productive process to a certain end. This 
too is a kind of energy. Prof. Clark does not carry the en- 
terprizer's force to such a degree of abstractness as he does 
that of capital and of labor. Now these three forces com- 
bine in order to produce goods. Each does its share. Labor 
takes its product in wages, capital takes its product in in- 
terest, and the enterprizer takes his product in profits, each 
in proportion to his creative contribution. 

In seeking the solution of the problem Prof. Clark de- 
mands another heroic feat of imagination, namely, that we 
should construct a " static state." By which he means a 
state of society in which there shall be no change in the labor 
power, quantity or efficiency ; no change in the capital power, 
in tools, machinery, processes; no inventions, no catastro- 
phes. All shall be just as it now is, without change in the 
nature, character, or results of production. Thus all existing 
tendencies would have a chance to work themselves out into 
a perfect equilibrium. We should have the pure results of 
the pure powers working together. Besides this, Prof. Clark 
demands perfect competition in his static state. Capital is 
perfectly mobile; it goes always and without friction to 
its goal, the attainment of as much interest as it can get. 
Labor is perfectly mobile; it goes always and without fric- 
tion to its goal, the attainment of as much wages as it can 
get. This perfect competition is essential to Prof. Clark; 
without it his solution is blocked and ethical purity becomes 
invisible. 

One other thing seems in need of clear statement. What 
are we to understand by a " natural law of distribution," or 
otherwise expressed, what is a " scientific law " of wages, 
interest, and profit? Prof. Clark is to show a tendency in 



CLARK'S PRODUCTIVITY THEORY 67 

modern industrialism which establishes at least its " honesty " 
in distribution. This tendency is to appear independent of 
social institutions; there shall be no "institutional robbery" 
in order that no " explosive element lie at the foundations of 
society." Now it appears that Prof. Clark admits a little too 
much ambiguity in his terms, " natural," " scientific," * extra- 
institutional ' law of distribution. These terms are not ex- 
actly synonymous. Given certain social data somehow fixed 
and determinate, then a clear statement showing the inter- 
relation of the data and the results following may take the 
form of laws, and these laws may be both " natural " and 
" scientific." This fact however need not render the law 
extra-institutional, for the data themselves may explicitly or 
implicitly involve the institutions in question. Now since 
Prof. Clark certainly desires that his law of distribution 
escape institutional origin, he must make it perfectly sure 
that he has cut off all such possible influences ; otherwise his 
attempt may be abortive. Prof. Clark makes the attempt, 
and, if we mistake not, he fails. 

In seeking for *' a natural law of distribution," for " a scien- 
tific law of wages, interest, and profits," Prof. Clark at first 
simplifies the problem into the question of ascertaining the 
parts of the product created by labor and capital respectively. 
The economic problem thus put resembles in part that of 
the composition of forces in mechanics. The determination 
of the component result of two forces of the same kind is in 
some parts of physical science not particularly difficult. A 
blow of seven pounds delivered upon a ball of a certain 
weight can readily enough be compounded with another 
blow of, say, ten pounds upon the same object. With ad- 
equate data, the exact resulting position of the ball can be 
figured out. The inverse problem, the resolution of the effect 
into the respective contributions of two forces, is not likely 
to give any definite answer. Unless a number of other exact 
data be given, the problem is apt to remain indeterminate. 
Of course when the forces themselves are of unlike nature, 
the mere science problem becomes still more troublesome. 



68 ETHICS AND ECONOMICS 

Hence even though Prof. Clark by abstraction has seemingly 
got his forces to be pretty much of the same nature, pure 
labor power, pure capital power, his problem may yet not be 
quite so simple as at first sight it seems to be. 

One case at least of this problem appears to be abandoned, 
even by Prof. Clark himself, the case of the capitalist-laborer, 
the independent producer. When such a man applies his 
own capital, tools, and instruments and also his own labor 
power to the production of an article, — " Hopelessly merged 
with the product of [his] capital is the product of the labor 
of an independent producer. Instead of presenting the con- 
dition in which the wages of labor are readily distinguished 
from other incomes and identified as ' the product of labor,' 
such a primitive economy as actually exists is one in which 
it is impossible to say what the product of labor itself 
is" ("D. of W.," p. 84). 

It would perhaps be rather hasty or narrow to express any 
strong dissatisfaction with Prof. Clark's surrender in this case. 
He wants a solution of the general case, not one good for only 
a special instance. Yet, after all, special solutions may shed 
light. Within his limits the independent producer has per- 
fect competition; he can substitute his labor power for his 
capital power; he can vary the respective quotas of each. 
He can come to the production " empty-handed " or even 
with a tool whose capital value is so small as to be " neg- 
ligible " ("D. of W.," 89, 160). Certainly in some cases he 
can evaluate empty-handed labor and machine labor. He 
can " empty-handed," that is, without tools or implements, 
carry bricks for eight hours a given distance, and compare 
that result with the result of using a wheelbarrow as an aid 
for the same length of time. 

But with Prof. Clark abandoning the independent producer 
as giving only special solutions, take his first simple illus- 
tration as to how the contributions of labor and of capital 
to a product can be determined with scientific precision and 
generality. A farmer possessor sets to work on his farm an 
empty-handed, able-bodied laborer; a certain product is ob- 



CLARK'S PRODUCTIVITY THEORY 69 

tained. The farmer adds another laborer to the force; a 
different product is obtained, usually not double the first 
product. Another laborer is added, and still another, each 
time with an increased result, but usually each addition to 
the product is less than the preceding addition, that is, the 
law of diminishing returns is manifested from the very out- 
set. Now how long shall the farmer keep adding laborers 
to his force? Manifestly not longer than it is profitable for him 
to do so in accordance with the ruling wage scale. Evidently 
when the addition to the product made by a laborer does not 
exceed in value the wages paid to him by the farmer, the far- 
mer gains no profit. When the value of the increment exactly 
equals the wages paid, the farmer must stop, or he will lose 
on the next man. The laborer takes his wages, the equiv- 
alent of his product. But further, since the laborers are sub- 
stantially of the same grade, being in perfect competition, 
each may take the place of each, they are interchangeable; 
no man can get more than the last man gets, all take tht 
same pay. The farmer takes all the surplus above the wages 
paid out to the men. In case of workers of different grades 
the principle is in no wise altered. The men in each grade 
being by perfect competition interchangeable, all must take 
what the last man in their grade can get. These last men 
are marginal men ; their products are marginal products. 
And " wages everywhere tend to equal the marginal product 
of the marginal laborers " (" D. of W.," p. 105). 

Prof. Clark himself however tells us that this farm sketch 
is but a rude and insufficient representation. Hence he takes 
us into the great industrial world with its abundance of pure 
capital, pure labor, and with its perfect competition. 
Everywhere in this world are enterprizers testing the 
worth of capital-labor combinations. Improved, standard, 
and old machines are being tried out. This quantity and 
that quantity of labor power are being gauged. Capital 
flows to its greatest good, labor flows to its perfect reward. 
So that everywhere what a unit of social capital power can 
produce, and what a unit of social labor power can produce 



70 ETHICS AND ECONOMICS 

are in process of learning. One enterprizer finds that his 
conditions enable him to use just so many interchangeable 
labor units, if he is to avoid disaster from diminishing re- 
turns. Another enterprizer finds a different result. They 
bid against each other either for capital,- or for labor, or for 
both. Thus from the perfect mobility of labor and of capital, 
capital units tend to get the same reward, and labor units 
likewise tend to equality of reward. It is in this large world 
of which the farm constitutes only a minute fraction that 
true differential results are found, whereby the product of the 
last labor unit and that of the last capital unit are discrim- 
inated from the product of non-marginal units. Here the 
wage scale and the interest rate are really established. This 
wage scale and this interest rate tend to correspond ac- 
curately with the product of the marginal or last unit of labor 
and capital respectively. 

Prof. Clark is enamoured of his tests. So that after his 
preliminary crude farm illustration and after his extension 
of the farm test to the whole industrial field, and still further 
after additional abstractions and assimilation of his concep- 
tions to the law of final utility as applied to consumers' 
wealth, he returns to his creative tests. In Chap. XXI of his 
book he makes his complete and finished statement of eco- 
nomic causation, especially in connection with the idea of 
the exploitation of labor and of capital, and in comparison 
and contrast with statements made formerly by a German 
economist, von Thuenen. Von Thuenen saw in the produc- 
tivity theory exploitation of labor and of capital, whereas 
Prof. Clark sees in his own " specific productivity theory " a 
law of distribution, " desirable and morally justifiable " (p. 
324.) To quote Clark : 

" Let the amount of capital remain fixed, * * * unit 
by unit join labor with it. (" D. of W.," p. 320.) Let the 
combination of C and L obtain a product represented by a 
certain rectangle (321). Now add a second unit of labor: 
the combination is C and 2L; represent the product of this 
new unit by a smaller rectangle" (321). "How do we esti- 



CLARK'S PRODUCTIVITY THEORY 71 

mate the specific product of the new increment of labor? 
The essential fact is that the new working force and the old 
one share alike in the use of the whole capital and with its aid 
they now create equal products. The earlier men have re- 
linquished a half of the capital that they formerly had, and 
in making this surrender, these men of the earlier division 
have reduced the productive power of their industry by the 
amount that the extra share of capital formerly imparted to 
it. This reduction measures the amount of the product that 
is attributable to the relinquished capital. Of prime im- 
portance is this fact that the product which is now attribu- 
table to the first section of the working force with its tools 
and other appliances has now become smaller than it for- 
merly was solely by reason of the capital that has been taken 
from it" (323,-4,-5). 

" Two facts are now clear : and we may state them briefly 
in two propositions which include a whole theory of eco- 
nomic causation — a theory that tells us to what agency each 
fraction of a composite social product is traced. (1) The 
difference between what the first division of workers created 
by the use of the whole capital, and what they now create 
is an amount that is solely attributable to the extra capital 
which they formerly had. (2) The difference between what 
one increment of labor produced, when it used the whole of 
the capital, and what two increments are now producing, by 
the aid of the same amount of capital is attributable solely 
to the second increment of labor" (325). 

« * * * Y^-g have been careful to guard against the 
notion, that at any one time there is a difference between 
the products of different units of labor as such. Each of 
them with its share of capital produces one-half of the whole 
present output of the industry, but a half of the present out- 
put is less than was the whole output when only one man 
was working with the aid of the entire capital. This re- 
duction measures the product of one-half of the capital as 
used by one unit of labor. On the other hand, the whole 
product, now that the two units of labor are working is 



72 ETHICS AND ECONOMICS 

greater than was the whole product with one working; and 
this addition to the product is due solely to the accession of 
labor. The amount of the addition measures the product 
of that labor, and of all labor under the present changed con- 
ditions " (325, 326). 

" If C stands for the amount of capital that is used in the 
industry and if L stands for one unit of labor, the difference 
between the product of C -j- I- and that of (C -j- 2L)/2 is the 
amount that is attributable to one-half of the capital. The 
difference between the product of C + 2L and that of C + L 
is the amount that is attributable to a unit of labor " (325) 

* * * " Keeping the original capital intact, and changing 
only its forms, let us add a third unit of labor to the force, 

* * * and, if we continue to make similar additions to the 
force till it is complete, the product of the last unit of labor 

* * * is the standard of wages. It is the specific product 
of any one unit of labor" (327). 

We saw above Prof. Clark's anxiety to determine 
the place of the marginal laborer and that of the marginal 
unit of capital. His whole theory so elaborately developed 
turns upon this point. Without it, he is lost; with it, he is 
perhaps not saved. Now how in fact is this margin of ut'l- 
ization to be located? This is the important question. On 
page 346 Prof. Clark tells us: " The product of any productive 
agent is, in fact, just what it can add to the marginal product 
of capital and labor," or " The product of any specific agent 
is what it can add to the product of the labor and the capital 
that work with it, when these products are thus computed 
on a marginal basis." On page 348 he says : " The fact is 
that wages and interest locate the margin. These determine 
how poor a grade of land it will pay to utilize. We follow 
the gradations of land downward till we get a piece that 
adds nothing to the marginal product of labor and capital, 
which is the same thing as saying that a piece produces 
nothing more than wages and interest. There we stop." Here 
for the individual enterprizer we are plainly back to the 
wage scale rejected in the farm illustration. On page 352 is 



CLARK'S PRODUCTIVITY THEORY 73 

the statement: "The location of the several margins of util- 
ization is effected by our comprehensive law. Entrepreneurs 
[enterprizers, captains of indusLry] stop using anything when 
they find that it adds nothing to the marginal product of 
other agents. Independentl}'- of all considerations of hu- 
manity, they would from mere self-interest stop employing 
the labor of child or of disabled person, if his work added 
nothing to the interest of the capital that they would have 
put into his hands." * * * ' Similarly with any capital 
instrument.' The universal law which locates them at any 
one time is: "All depends upon the quantities of the 
several agents that are brought together." "Abundant 
capital would mean a high rate of wages, as well as the em- 
ployment of a poor grade of labor. Abundant labor would 
mean the employm.ent of poor lands, poor tools, poor build- 
ings, etc." He might have added; and a high rate of profit 
and of interest also. 

Such in barest outline is Prof. Clark's solution of the 
economic problem, and from this answer his readers are to 
infer that ethical purity and sweetness so strongly insisted 
on in his " Preface " and " Chapter I." Before proceeding to 
a detail examination of Prof. Clark's work, we may point 
out as fundamental a situation which molds the question itself 
and the solution offered. Apparently Prof. Clark has on 
his hands only a "pure science" problem, namely, to de- 
termine the several contributions of labor power and of cap- 
ital or machine power to the making of a product. This 
problem seems by abstraction to be quite independent of 
social organizations, and to be capable of treatment by usual 
scientific methods. But Prof. Clark gives no hint that this 
" pure science " problem bottoms for its origin and signif- 
icance on the social opposition between ownership of material 
power and ownership of mere labor power. The " pure 
science " problem arose after the social division was an 
established fact. As a mere scientific question it would have 
had no such staying qualities, had not some powerful social 
influence been stiffly insistent upon putting its way through 



74 ETHICS AND ECONOMICS 

at all costs. Only strong persistent motives could lead to 
overriding- the great dissimilarity between labor force and 
machine force; especially since this dissimilarity necessitates 
larger assumptions than usual for even only the approximate 
answer to the problem. The essence then of this " pure 
science " question is in fact to find an answer which shall 
"justify" the owners' appropriating a part of the product. 
Inevitably as death, Prof. Clark, glorifying the bases of ex- 
isting society, will find a solution which shall contain the 
"justification " sought. Furthermore all theories, which rep- 
resent interest and profits as something issuing from the 
natural powers of material capital, are simply attempts to 
express, under the guise of " pure science," a division of an 
economic product in such a way that owners may, with 
ethical approbation of themselves and others, appropriate a 
part of the product. Hence for present purposes an examin- 
ation of Prof. Clark's work will dispense with the claims of 
all other productivity theories. 

The examination will be made under four large heads : 
I. The approximate economic solution is obtained only 
through confusions. II. The ethical defence rests upon a 
confusion of ethical tests. III. Clark fails to repel the charge 
of "institutional robbery." IV. Clark's method of "purify- 
ing " capitalism by " group " or " functional " distribution. 

I. CONFUSIONS ON THE ECONOMIC FIELD 

/. Confusion of Physical Causation and Social Division 
Repeatedly Prof. Clark would impress upon his readers the 
" scientific " character of his law. He takes them back into 
primitive economies ; he sloughs ofif all social forms by pass- 
ing into the realm of physical causation ; apparently his theory 
represents the necessity of physical science. (" D. of W.," 
pp. 25, 37, 40, 47, 82, 135). One therefore expects a solution 
in whicii the productive power of the agents involved shall 
be measured with something of the impersonal certainty of 
physical science. For example : suppose steam power and 
water power are combined to effect a certain result. The 



CLARK'S PRODUCTIVITY THEORY 75 

steam power can be measured ; the water power can be 
measured. The effect may be divided pro rata to the powers 
involved; a sum paid for the hire of the two powers could be 
split in the same proportion. In this case division would 
occur according to creative contributions. Rightly or 
wrongly one looks for a similar result from Prof. Clark's 
testings. 

Turn now to Prof. Clark's simple farm illustration. 
Here land fertility and human labor are conjoined to form 
an agricultural product. The product is to be divided ac- 
cording to the respective contributions of the workers and 
of the powers of nature. How ascertain the respective 
contributions? Put an able-bodied, empty-handed laborer 
to work upon the farm. A certain product, AB, results. 
" When there was available only a piece of land with no labor 
to till it, the product was nil. When one unit of labor com- 
bined itself with the land the product was AB ; and in this 
form of statement we impute the whole product to the labor." 
(" D. of W.." 195.) Singular creation. The land's power 
counts for nought ; labor's power counts for all ! Ah, but 
add another unit of empty-handed labor; a different product 
emerges, not usually double the first product, because of 
diminishing returns. The difference between this second prod- 
uct and the first product is attributed to the second laborer 
as the rcAvard of his causal efforts. A like amount is now 
taken from the first product as the creation of the first laborer; 
this, because of diminishing returns. Necessarily a surplus 
remains. This surplus, Prof. Clark makes out to be the 
creative contribution of capital. " In reality this surplus is 
the fruit of the aid that the land affords and is attributable to 
the land only. A correct conception of the nature of any 
rent makes it a concrete addition which one producing agent 
is able to make to the product that is attributable to another 
producing agent. Land makes its own addition to the prod- 
uct of each unit of labor except the last " (" D. of W.," 
195). 

Hence on this farm, as labor units are added one after 



76 ETHICS AND ECONOMICS 

another, and since diminishing returns hold throughout, each 
successive laborer creates less and less, and because of the 
interchangeability of labor units, labor's relative creative 
contribution as a whole must be regarded as diminishing 
and capital's contribution as increasing. In the end labor 
creates nothing and capital creates all; for" as a physical fact 
the moment comes when not only will labor units added not 
avail to increase the product, but they may be detrimental by 
being in one another's way. Since the last labor unit con- 
tributed nothing, or was even a detriment, and since the 
labor units are all interchangeable, so each labor unit and all 
labor units create nothing or even owe something to the 
farm; the farm as capital takes the whole product, or even 
exacts a debt-toll from the workers. Now this creative con- 
tribution of the farm which when only one labor unit was 
added gave nil, and at another time created the whole prod- 
uct is certainly a curious thing, curious at least, not to say 
absurd. And the labor power which at first created the 
whole output, and yet when increased by unit after unit fell 
away to a zero product or less belongs to the same class of 
curios. As a physical fact the farm is working all the time; 
the labor power is growing all the time, and yet socially the 
farm is taking more and the laborers less of the total prod- 
uct. On this farm physical causation and social division 
seem to be utterly confounded. 

This confusing of physical causation and social division, 
so nicely suggested and prepared for in the above quotations, 
permeates Prof. Clark's exposition from beginning to end. 
The contrast between capital's growing reward and labor's 
share is even heightened in his chapters on Economic Causa- 
tion ; there and elsewhere he indicates that in adjusting the 
same capital power to an increasing number of labor units, 
the capital instruments engaged must be regarded as increas- 
ing in number and as decreasing in efficiency.. Division here 
seems a sort of inverse of creation. 

It may be said that the above criticism applies well enough 
to the physical quotas got out but not to the values created, 



CLARK'S PRODUCTIVITY THEORY 77 

and of course Prof. Clark is establishing value productivity. 
Now by a value product is meant, not the physical quantities 
of products got out, but the prices obtained for the quotas. 
Expressing the matter in money terms, the net wages which 
labor receives are compared with the net money returns of 
the capitalist. The greater the product got out, the less the 
value or price per piece. Hence though the physical produc- 
tivity of either the labor, or the machinery, or both, may in- 
crease or may have increased vastly, yet the value per piece 
may have gone down more than enough to counterbalance 
the increase in physical productivity, so that those concerned 
in production may be worse off than before. Value produc- 
tivityists would establish a relation between the values re- 
ceived by labor and capital in the productive process. 

But this view only makes more conspicuous the confusion 
indicated. Undoubtedly physical causation is involved in 
getting out the physical product, and therefore in the value 
product, for without the physical product there would be no 
value product at all. Since the labor power and the capital 
or machine power did create something, and since this some- 
thing is now read in value terms, it is surprisingly easy and 
" natural " to say that they created the values they received. 
The entire social mechanism whereby the physical product 
is turned into a value product is here quietly disregarded, or 
rather, is treated as ^delding causal elements of precisely the 
same character as those of physical nature. So far as this 
disregard is carried onward, Prof. Clark's term, " specific " 
product, becomes a question-begging epithet. 

2. Mathematical Confusio?t; A? ithmetical and Social Units 

To this first confusion, that of physical causation and social 
division, must be added the confusion of treating a compo- 
sition of physical and human forces in a social causal com- 
bination, as if it were wholly like a combination of arith- 
metical units. This, Prof. Clark does in his " Theory of 
Economic Causation," Chap, XXI. Because so much of the 
plausibility of the ethical defense of capitalism rests upon 



78 ETHICS AND ECONOMICS 

confounding physical, mathematical, psychological, and legal 
necessities, it is necessary to enter into a rather tedious 
discussion of Clark's Theory of Economic Causation. 

Recurring to the quotations from Clark's Chapter 
XXI, which statements seem fundamental, it will be well 
perhaps if Prof, Clark's presuppositions be tabulated with 
some care, (a) The amount of the capital remains fixed. 
(320, 323, 325.) (b) The law of diminishing returns sets in. 
(323, 325, ff.) (c) Labor units are interchangeable at any one 
time. (324.) (d) Labor units are interchangeable from group 
to group, that is, from C + L to C + 21. (325 Test 1.) " The 
difference between what the first division of workers 
created by the use of the whole capital, and what they now 
create is an amount that is solely attributable to the extra 
capital which they formerly had " ; if " solely " to capital, 
then there can have been no change in the work power and 
the work product of a labor unit from group to group, (e) 
The fixed capital produces the same effect from group to 
group. (325, Test 2.) — "The difference between what one 
increment of labor produced when it used the whole of the 
capital and what two increments are now producing, is at- 
tributal solely to the second increment of labor " ; if 
" solely " to labor, then the effect of the capital from group 
to group is unchanged. (f) This process of adding labor 
units may be carried farther. " Unit by unit join labor 
with it." (320.) "* * * if ^e continue to make similar 
additions to the force till it is complete." (327.) Prof. 
Clark here would seem to imply that a continuance of this 
mode of testing will give acceptable and consistent results, 
(g) On page 330 ff., Prof. Clark proposes " another mode 
of distinguishing the product of all labor from that of all 
capital." It consists of joining unit by unit successive cap- 
ital units to one labor unit. Instead of C -]- L, C -f 2L, he 
takes L -|- C, L + 2C. The reader should examine with ex- 
treme care points (d), (e), and (f) ; they contain Clark's 
confusing plausibility. 

Now Prof. Clark's procedure in the whole matter implies 



CLARK'S PRODUCTIVITY THEORY 79 

that for him in C and L we are dealing with forces of essen- 
tially the same kind. They may be interchanged at will, may 
be added, subtracted, multiplied, divided, in short be arith- 
metically treated without damage to the reasoning or to the 
results. Each unit of capital produces its proper effect (con- 
stant) regardless of the number of labor units associated 
with it and vice versa. The matter may be tried out a little 
farther. Prof. Clark fashions a set of tests in conformity 
with his presuppositions. Satisfied with the outcome of his 
testings he invites the reader (tacitly at least) to believe that 
succcessive applications will yield harmonious results. First 
then his test (2), For simplicity's sake, arithmetical values 
are used below; the reader may use algebraic symbols, if 
he will. 

The combination C -]- L gives a product, say 10 ; C + 2L 
gives a total product, say 10 + 8 = 18; that is, something less 
than twice the original product according to the requirements 
of the law of diminishing returns; C is unchanged in amount; 
L is increased by one unit; therefore 8, the difference in the 
effect, is owing to L, the difference in the cause. Since the 
labor units are interchangeable, each takes or produces the 
same amount; the total product of 2L is 16; the remainder, 
18 — 16 = 2, is the product and part due to C. 

From point (d) above, labor units are interchangeable 
from C + L to C + 2L. From point (e) above, capital, C, 
has the same total power in C + L and in C + 2L. As Prof. 
Clark invites the reader to add unit to unit (f), the like 
should hold from C + 2L to C -f- 3L, from C + 3L to C -f 4L, 
to C+SL, and so on. Similarly then from C -f L and 
C + 5L, one might determine the product of C and of 4L, 
since these groups differ by only 4L; from 4L, one can get 
L, since the labor units are interchangeable at any moment, 
and also from group to group. Represent then the first product 
by 10, the first increment when one more labor unit is added 
by 8; let each successive increment be less by 2; the succes- 
sive increments then are 8, 6, 4, 2. 

(1) In C + 3L the product is 10 + 8 + 6 = 24; the total 



80 ETHICS AND ECONOMICS 

product of C + 2L is 18; the difference in the cause is L* 
the difference in the effect is 6; L therefore causes 6; 3L 
causes 18; the remainder 6 is caused by C. (2) Now com- 
pare C -{-L with C + 3L. Their products are 10 and 24 re- 
spectively. The difference in the cause is 2L; the difference 
in the effect is 14; 2L therefore causes 14; L causes 7; and 
3L causes 21 ; the remainder 3 is caused by C. (3) Let 
the increment for C -f- 4L be 4. The total product then is 
28. In an exactly similar way as above compare this with 
that from C -f- L, C -f- 21., C + 3L, and one obtains 3 dif- 
ferent products for C, namely, 4, 8, 12, respectively. Going- 
onward to C + 5L from a similar comparison, one gets 4 
additional dift'erent products for C, namely, 5, 10, 15, 20, 
respectively. Suppose that in C -[- 6L, nothing is added to 
the product; the labor units are interchangeable, each gets 
nothing. The remainder, which is all, goes to capital; it is 
caused by capital. 

C -\- 6L produces 30. If one determines C's part of this 
30, by comparing in the Clarkian way C -1- 6L with C + L, 
then C is entitled to 6. If one compares it with C -\- 2L, then 
C gets 12 ; with C -j- 3L, then C gets 18. In tabular form : 
T-P = total effect or product ; dC = difference in cause ; 
dP = difference in effect or product; IL-p r= product of 
one labor unit; T-L-p =: total labor product; C-p = capital's 
product, which results from subtracting T-L-p from T-P. 

Cause. 

C 4- 6L 
C -I- 5L 
C -f 4L 
C -f- 3L 
C -f 2L 
C 4- L 

The attempt therefore to pursue Prof. Clark's test (2) be- 
yond his first step appears to land in the absurdity, that with 
every different comparison a constant capital yields a dif- 
ferent product. If this test (2) carries with it absurdity 



T-P 


dC 


dP 


IL-p 


T-L-p 


C-p 


30 


^ , 


^ ^ 








30 


30 


IL 











30 


28 


2L 


2 


1 


6 


24 


24 


3L 


6 


2 


12 


18 


18 


4L 


12 


3 


18 


12 


10 


5L 


20 


4 


24 


6 



CLARK'S PRODUCTIVITY THEORY 81 

along the whole line, must one not conclude that even the 
first modest application contains the same absurdity? 

It was seen in point (g) above that when Prof. Clark finds 
capital's contribution by subtracting labor's product from 
the total produce, he invites his readers to regard capital and 
labor as forces of precisely the same kind as respects the 
division of the economic product. Otherwise how can he 
take even his first arithmetical step? If then this assump- 
tion holds, C's power must be some multiple of L's power. 
In genuine causation one expects the same cause to produce 
the same effect, other things substantially equal. Let C = mL. 
If then the Clarkian comparison and arithmetical treatment 
be applied to C + L rr= 10, C + 2L =18, C + 3L = 24, then 
in C -j- L == 10 and C -|- 2L rr: 18, C comes out 8ni. In C -|- 
2L =z 18 and C + 3L =^ 24, C comes out 6m. If somehow 
m's value could be found outside of this series and were 
taken to be constant, one would expect to find some con- 
gruity, if numerical treatment in the Clarkian manner were 
applicable. It however one seeks to determine m from the 
values given (illustratively) for C + L = 10, C -|- 2L = 18, 
m comes out with entirely different values according to the 
pairs treated. It thus become plain that Prof. Clark can not 
without confusion and contradiction maintain at the same 
time all the assumptions in his two tests. 

But one test seems not sufficient. Prof. Clark will have 
a second test. The question is how different this new test is 
from the former one, and whether it fares better with the 
implicit contradictions. Prof. Clark uses the original data, 
C A- L, and C -|-- 2L. He now divides C -}- 2L and its total 
product, say 18, by 2, and gets {C/2)-^ L =r 9. But C + L = 
10. In the former case he had one unit of capital in common, 
C + L, C + 2L. Now he has one unit of labor in common, 
(C/2)4- L, and C -]- L. He reasons as before. (C/2) -f- 
L = 9, C+I-=10. The difference in the cause is (C/2), 
" in the surrendered capital," (C/2) causes 1. Therefore 
since the capital parts are interchangeable, all C causes 2, 
and L causes 8. In the next step, a labor unit in C -j- 2L 



S2 ETHICS AND ECONOMICS 

now uses one-half of the capital, (C/2) ; a labor unit in C -|- 
3L uses (C/3) ; any difference in the effect is due " solely " 
to the difference in the cause. C -|- 2L gets 18, C -|- 3L gets 
24. Divide by 2 and 3 respectively. (C/2) + L == 9, (C/3) 
+ L = 8; the difference in the effect is 1; the difference in 
the cause is (C/2) - (C/3) =(C/6); (C/6) causes 1 ; all C 
causes 6; each labor unit in C + 3L causes 6, Again capital 
g-ets more and labor units get less. The two tests are really 
identical. 

On page 330 Prof. Clark appears to have yet " another 
mode of distmguishing the product of all labor from that of 
all capital." it consists in adding capital units to a fixed 
labor force ; instead of C H- L, C + 2L, he takes L -|- C, L -f- 
2C, etc. He repeats the above reasoning, aid necessa i y g^ts 
results entirely similar to his former results, and he seems 
gratified at the confirmation thus obtained. The reader can 
take the former results and interchange L and C throughout 
Thus: 

C + L = 10, C + 2L = 18 ; hence, L == 8 and C = 2. 
L + C = 10, L + 2C = 18 ; hence, L = 2 and C =r 8. 

Prof. Clark would have to overturn fundamental arith- 
metical ideas, if his results did not have this sort of congruity. 
He may well be gratified that his tests did not dislocate 
arithmetical connections. This " another mode " is the same 
mode, just as tests (1) and (2) are the same tests. When 
the King of France marched his men up the hill and then 
marched them down again, his passage back could have been 
made questionable by, say, an earthquake. Earthquakes 
and the like can not disturb the changeless character of 
schematically fixed mathematical definitions and processes. 

Prof. Clark in his testings considers only diminishing re- 
turns. He found it unnecessary to go beyond this, because 
he holds that diminishing returns are bound to set in at 
some time, atid because they are thus the general case. It 
is suggestive however to observe a point or two in the other 
cases. With diminishing returns C and L, whether in the 
original C -f- L series or in the L -{- C series, are both positive 



CLARK'S PRODUCTIVITY THEORY 83 

in their effect. But in increasing returns one becomes neg- 
ative, C in the C + L series, and L in the L -|- C series. 
Only in the case of constant returns do the values for C and 
L hold throughout the series. If increasing or constant re- 
turns rather than decreasing returns were the law of nature, 
economics and ethics would take on forms quite other than 
those of to-day. 

Perhaps a little closer view of the assumptions in Prof, 
Clark's procedure may not be amiss. Now nothing can 
seem more natural or rational than Prof. Clark's tests, his 
appeal to causality. Yet it is by this time quite evident that 
his causal mixture can be worked only by displacing the 
causal relations of concrete elements by pure number ideas. 
Prof. Clark will have interchangeability of labor units and 
of capital units, that is to say, combination is merely numer- 
ical. Solely on this supposition can Prof. Clark take his first 
step in testing. The next step, either with diminishing 
returns or with increasing returns, upsets this indentification 
of the causal process v/ith number processes. If one holds 
to diminishing returns, and pursues the comparison of C -f- L, 
with C -I- 2L, C + 3L, C + 4L, and so on, labor units get 
less and the capital units get more. All intermediate values 
for C and L are easily explicable. Since in the total capital- 
labor combination, the addition of each successive labor unit 
is accompanied by a lessened return, and since the labor units 
are interchangeable and take the last return, the arithmetical 
average of a number of unequal things of the same order is 
necessarily larger than the least of them. Hence the differ- 
ent net products of labor units according to the number of 
units and increments involved. Capital's share, got here 
merely by subtraction, escapes the diminishing returns and 
increases accordingly. The third combination C + 3L shows 
that one can not at once hold the constancy of C, labor's 
first product, diminishing returns, and the interchangeability 
of labor units from group to group. If one tries to hold C 
constant in all three groups, one finds some of the product 
unaccounted for. When next Prof. Clark divides C + 2L = 



84 ETHICS AND ECONOMICS 

18 by 2, he is again resorting to numerical treatment. Again 
the plausibility of his statements rest upon the pure mathe- 
matics. One little squeeze in the next step, and the bubble 
is punctured. C -f L = 10, C + 2L = 18, C + 3L = 24,— 
these are inconsistent equations. No twisting of pure arith- 
metical values will make them consistent. Such equations 
remain inconsistent in diminishing returns, and in increasing 
returns ; they become consistent only in constant returns. 
Prof. Clark however rather insists upon diminishing returns 
and on joining C and L together " unit by unit." 

It is all perfectly intelligible from the pure number point 
of view. Diminishing or increasing returns contradict the 
constancy of unit capital force and unit labor force, or the 
interchangeability of units from group to group ; one can 
not hold all three. One can not at one moment divide a 
capital-labor union and the product as in C + 2L = 18 di- 
vided by 2, giving (C/2) -|- L r= 9, and then go ahead as if 
this little change v/ere quite axiomatically acceptable. One 
can not at the same time eat one's cake and have it uneaten. 
When Prof. Clark springs thus without adequate warning 
from pure numbers to concrete causal relations in econ:mi;s, 
he is guilty, it would seem, of abusing an analogy. An or- 
ganic combination can according to his procedure be divided 
just as if it were merely the sum of its discrete parts. In- 
deed economists seem rather fond of this device for getting 
onward. — a principle applicable in part to an individual or 
to a fractional part of a society under certain conditions, is 
generalized or applied to society as a whole. Prof. Clark's 
testings might have suggested to him another interpretation, 
were it not that he is bent upon a different enterprize. 

Manifestly Prof. Clark in his testings applies to economics 
the mathematical approximation methods of physical science. 
These methods often necessitate rather arbitrary assumptions 
and simplifications to further the purposes deemed practical 
and legitimate by the persons in control. This is true even 
when the forces dealt with are alike in being purely mater'al. 
The presuppositions and all other factors are to remain virtu- 



CLARK'S PRODUCTIVITY THEORY 85 

ally constant. Only within such limits and assumptions does 
the solution hold. luterchangeability of units from group 
to group is kept within close bounds. Still more must this 
be the case when dealing with diverse elements, such as 
those of a capital-labor combination, wherein living units 
with all their varied mental and spiritual possibilities are 
pitted with or against purely material capital power. 

The preceding tedious pursuit of Clark's method and test- 
ings was only to indicate that his " joining of unit to unit 
till the force is complete " overrides beyond doubt those 
limits within which interchangsabili'.y of units might without 
strain be acceptable. Clark himself gives a diagrammatic 
representation of the addition of ten successive units, just 
as if this process could properly go on indefinitely, but the 
wide variation of the products to be attributed to these units 
was seen to be too marked ; the approximation of the first 
testings vanishes by prolonging the process, and thus lays 
bare and questionable the assumptions in the very first step. 
Only when " the force is complete " is the true margin and 
marginal man found ; all others are but " transient " margins 
and marginal men. But the vital questions are: — How 
know when "the force is complete?" What are the causes 
which establish the " completeness " of the force? Now these 
causes are either physical, or social, or both these combined; 
in which case one is back into the confusion previously 
discussed. When the genuine causes determining the mar- 
gins are seen, Clark's theory of " economic causation " is also 
seen to be an abstract superfluity : it is a construction or 
after-image, which masks the forces really determining mar- 
gins, in that it interchanges the functions of actual elements. 
His " joining of unit to unit " leads to confounding mathe- 
matical units with social units, and to concealing the prasup- 
positions of his approximation. To present these prominently 
would render too evident their social foundations ; — a fact 
which would largely dissipate the "naturalness" of his law 
of distribution, and uncover too clearly a significant ethical 
confusion. In short. Prof. Clark stretches an approx'mation 
process beyond due limits; naturally, it breaks in twain. 



86 ETHICS AND ECONOMICS 

J. Psychological Confusion ; '* Perfect" Compelition and Real Life. 
Recurring to the farm illustration and its extension to the 
commercial industrial world (pp. 68, 69), one encounters 
another class of necessities which are to avail Prof. Clark's 
theory of the specific productivity of capital and labor. The 
influence of the wage scale without the farm, and the com- 
manding position of the owner of the tillable fields lead too 
easily to the conception of exploitation possibilities on both 
sides. The location of the margin is blurred and hence that 
of the creative contribution. If the farmer stop at the first 
man, the man's contribution according to Clark is the whole 
product; a result, bad indeed for the farmer, to which in fact 
he never would submit. But the blur exists, whether the 
farmer stop at the second, or the third, or the ninth man, 
" transient " marginal men, Clark might call them. Where 
then shall the farmer finally stop? Where else according to 
Clark than in the " zone of indifiPerence," where the last 
increment to the crop just equals or barely exceeds the wages 
paid to the man last added. Above that the farmer wins; 
below that the farmer loses. This point, where the farmer 
neither makes nor loses, is the true marginal point, which 
shows accurately the creative contributions of the capital and 
the labor respectively. 

But this procedure on the farm appears to make the wage 
scale the decisive factor. Clark himself says : " The fact 
is that wages and interest locate the margin." In general 
then the enterprizer stops when the employee no longer pro- 
duces an amount equal to his wages and the interest on the 
capital put into liis hands. Seemingly the final decision rests 
with the enterprizer; he must get back the wages and the 
interest paid out. Anywhere short of this, he may stop ; 
beyond this he can not go. If he can depress wages and in- 
terest, then he may keep on adding labor and capital units to 
the extent of his power to curtail his expenses, and thus 
because both of the interchangeability of like units and of 
diminishing returns, he may add to his profits. But after 
all the enterprizer can not generally exercise in this matter 



CLARK'S PRODUCTIVITY THEORY 87 

a purely arbitrary caprice. To show us this, Prof. Clark 
takes us outside the farm and into the broad commercial- 
industrial world (p. 69). There we are to see that a general 
wage scale and a general interest rate establish themselves 
according to a marginal product. We are to see as a result 
that the enterprizers are in the end not the determiners, but 
that they are subject to forces beyond their control. The 
force locating margin is the thing. 

Tersely put. Prof. Clark would appear to say: Grant per- 
fect competition of both labor and capital, perfect mobility 
of each, perfect pursuit of economic interest, diminishing re- 
turns, every labor unit and every capital unit are to find em- 
ployment, perfect individualism of labor and of capital units 
is to prevail; then it must follow that a division of a product 
will occur exactly in accordance with the specific produc- 
tivity of each agent involved. It may be replied: So many 
perfections assumed, it is not hard to perceive that a perfect 
equilibrium results. Any even momentary disturbance of 
that equilibrium is instantly righted. A capital unit or a 
labor unit demanding too much sets in motion all other cap- 
ital and labor units, each perfectly mobile, perfectly nosing its 
best rewards, pure, unencumbered with any non-economic 
clogs. Each agent or factor, blind to any thing but its own 
individual economic interest but perfectly wise as to that, 
can not by any possibility permanently disturb the equilib- 
rium; the counterbalancing forces are too great; the system 
is definitely self-perpetuating, self-correcting, self-winding. 
Of course thus put, one is plainly dealing with an academic 
construction existing as such only in the head of the prcbiem- 
making thinker, with a set of schematic psychological and 
economic necessities, which can be made to assume almost 
any form he will, and yet to retain the air of concrete reality. 

But how decide that the division of the product brought 
about by this perfect competition is also that which elective 
contributions would demand? Suppose a state of equilib- 
rium; this means that labor units secure equal wages and 
that capital imits secure equal returns. A new style of 



88 ETHICS AND ECONOMICS 

machine is introduced; its specific productivity is in qestion. 
Now the machine must be built and, operated at first accord- 
ing to the cost rates of the previously established state of 
equilibrium. Well, set the new machine to work; by using 
appropriate units compare its output with that of an old- 
style machine ; if the ratio of its product to cost is less than, 
equal to, or greater than that of the old-style machine, the 
new-style machine is inferior, equal, or superior to the old. 
Very well; thus far it is experimental physical science. But 
how about the social division of its product? Note that in 
general the labor-machine combination also is new; the re- 
spective contributions of the labor and of the machine to the 
product are not yet known ; the verdict, " superior," is made 
on tlie old ratio of division between capital and labor. If now 
the old wage scale stand even temporarily, capital will here 
get more than its just share, that is, more than the average 
rate. The result will be that capital units will flow into this 
form of capital-labor combination and labor units will flow 
awa}'. This movement will afifect every unit of labor and of 
capital of all society, and will continue until a new state of 
equilibrium is reached wherein all capital units receive the 
same return and labor units likewise. This simply means 
that scales of division similar to the former scales are sought 
and found; it does not mean the ascertainment of the 
" specific " productivity of the agents involved. If biasing 
forces helped to shape the old scales, they may continue to 
work amid the new ; the " perfect " competition may play 
within only a special or limited field. This perfect compe- 
tition of all social units governed solely by self-interest re- 
moves at the very outset the possibility of any merely arbi- 
trary acts in establishing scales ; the difference in the powers 
of the machines suggests " productivity " ideas ; let the two 
sets of ideas coalesce ; give the results the same names. 
Manifestly however if tendencies to combinations, trusts, 
and labor unions exist, in such a case a division of the prod- 
uct will not be the same as the one just noted; new mar- 
ginal products and new " specific " contributions would be 



CLARK'S PRODUCTIVITY THEORY 89 

found. Now tendencies to competition and to combination 
do exist in our society ; take then your choice of the above 
offered margins and " specific " products. 

The truth is however that in this " perfect " competition of 
all-wise, self-interest driven units of capital and of labor, 
Clark is dealing with one of those schematizations wherein 
he places under vague names the conclusions he would draw 
from the premises. Accordingly this all-wisdom of the units 
involves knowing what the " specific " product really is ; yet 
these units are all-wise only on their respective sides of the 
chasm that separates the possessors from the dispossessed; 
neither party has sense or desire to bridge or to fill up the 
abyss. What need have such beings as these for " produc- 
tivity " or other theories? Still if you will have such supposi- 
tions, what wonder if you get back from them what you had 
already put into them.'' They add an atmosphere of plaus- 
ibility and profundity to the discussion, 
/. Confusion of Legal Necessity with Real Necessity. 

Another fountain of plausibility is found in the neces- 
sities which mark the legal relations existing between cap- 
italists and laborers. All through the representations of pro- 
ductivity theories, and Clark's is no exception, the necessity 
of labor and of capital to get out an economic product is em- 
phasized, and hence that the presence of capitalist and that 
of laborer are necessary. But the one necessity is physical 
the other is legal. Certainly it is impossible in production 
by modern processes to dispense with machine power and 
with labor power. It is not at all impossible to dispense 
with capitalists. Naturally from first to last Clark never 
seeks to remove the cleft. Constantly he recalls attention 
to physical forces; he will retain the plausibility coming from 
their distinctness. When he draws his distinction between 
" pure capital " and " concrete capital goods," — the one 
eternal, the other perishing in the using — and when he 
makes his theory of interest apply, not to the returns got 
from concrete capital goods, but to the reward of " pure cap- 
ital " as such, he installs social conventions and legal neces- 



90 ETHICS AND ECONOMICS 

sities in the very heart of his theory. For Clark's " pure 
capital " with its eternal life, its eternal activity in reaping" 
rewards, is only concrete capital goods plus the titles and 
the rights begotten, as it were, and maintained by property 
laws. Concrete goods must wear out or be consumed, if 
social life is to go on ; it is physical and physiological neces- 
sity. " Pure capital " never perishes. This means that the 
social convention of legal ownership passes smoothly from 
the old goods over to the new goods, together with all the 
consequences which flow from the continuit}'' of social life 
and of the legal necessities established by it. 

How much this idea of legal necessity increases the plnus- 
ibility of any theory, and how deeply it penetrates the popular 
consciousness, is shown by the inability of masses to con- 
ceive as possible any form of ownership of the fields of pro- 
duction except that of private ownership. It is the basis 
of the question often thought to be unanswerable : " What 
would the poor laborer do without the capitalist? Who 
would give him work?" The law of private property applied 
to production fields and instruments enables the capitalist to 
assert his indispensability, to claim machine power as his 
own output, to demand a portion of the product as his reward. 
Another result of this legal property relation is that now the 
passions, desires, purposes, in a word, the interests, of the 
individual capitalist can be more efifectively thrown into the 
problems of distribution. The power of possession can thus 
face the power of want in laborers, and contest the field 
with it. 

But in spite of prepossessions and unpliable psychology, 
legal necessity is plainly a highly variable thing. This is 
shown by the immense diversity and the changeability of 
property laws in past and present history. Hence the es- 
sentially transitory character of any economic theory that 
makes large use of this idea of legal necessity. 

5. Confusions fyom Absolute Ethics. 

If, to all the preceding, one adds the so-called absolute 
moral and religious or theological necessities, which flourish 



CLARK'S PRODUCTIVITY THEORY 91 

so abotinding^ly among abstract philosophers, intuitional 
moralists, and religious teachers, and which inevitably at- 
taching themselves to economic aspects of life filter down 
into popular consciousness through innumerable sermons, 
novels, poems, emotional idealizings, one readily understands 
both the forces driving to secure plausibility and the easy 
fixity of many economic beliefs. Productivity theories of 
the divisional returns of labor and capital, Clark's among the 
rest, gain credence largely because of a dextrous commingling 
of the necessities mentioned, the real, the schematic, the 
variable. 

To be fair in this matter: — If these theorists would frankly 
notice the differing character of their necsssities, would present 
them merely as given, and would then describe or trace out 
their interactions, one could contentedly see them evolve 
some sort of explanation of the division of an economic prod- 
uct between capitalists and laborers. In this way frac- 
tional explanations of the existing system might be worked 
out. But when by cloaked appeals to psychological, legal, 
and ethical principles, the system is defended as unchangaall;, 
the argument becomes circular; because existing psychology, 
law, and ethics are largely products of the system, and hence 
reacting causes of it. To confound these necessities, as if 
they all led to finalities comparable with those of physical 
science is highly objectional. Clark's theory, even in its 
schematic form, seems open to this charge of confusion. In 
the end instead of an absolute physical productivity theory 
he gives us a socially " effective " productivity theory. Since 
his theory is essentially social in origin, evidently the laws he 
develops must be as changeable or evanescent as the form 
of social organization which they express. 

6. Confusions from Static State to Real Society; Forces Locating 

Margins. 

Clark develops his law of wages and interest by repeated 

references to his " heroically imaginative " static state. Of 

course Prof. Clark is not seeking to play with another 

" Utopia " and its laws. He would have scarcely any use for 



92 ETHICS AND ECONOMICS 

his construct unless he thereby conveyed the idea that he 
was giving a more or less adequate transcript of or from 
actual economic society. All the weapons of his arsenal have 
their analogues in real life; from labor, capital, and compe- 
tition to final marginal valuations of millionaires and of 
paupers. Naturally he can represent as fully realized in his 
static state only a few tendencies of life. Results in his 
imaginative state unroll themselves with necessity; hence 
fraud, guile, violence, and inequities of all sorts are unknown. 
He would have his readers accept all this as expressing the 
dominant tendencies of present society. But having found 
even his schematic representation to be quite unsatisfactory, 
one needs make but a slight reference to it as an adequate 
picture of existing society. 

Always the real question is, What determines, that is, 
causes, the line of division between wages and interest to 
fall where it actually does? Clark's answer is: Competition, 
under the stimulus of self-interest all- wise even as to specific 
contributions. Now what of the relative status of the com- 
petitors, and what of the interests involved? In Clark's 
static state, though competition reign, every worker finds 
employment. In real life you can see competition in the long 
rows of empty-handed applicants for jobs; you read of it in 
every paper — the fruitless search for labor. The laborers 
must compete, and since no rule in our society says that 
every laborer must be employed — starvation being permis- 
sible — it is easy to see what happens, " They will submit 
to anything in order to preserve life." " What, in our so- 
ciety, is the empty-handed to do, if capitalists do not give 
him work?" "God alone knows" is true and famous an- 
swer of William H. Taft, former President of the United 
States. 

Suppose the capital power in a community to be fixed and 
the labor force to be doubled, what happens to the wage 
scale and the reward that is taken by capital under these 
conditions? Down go the wages because the laborers must 
compete to avoid starvation. Outer scales holding substan- 



CLARK'S PRODUCTIVITY THEORY 93 

tially, and under present conditions the capitalists not being 
compelled to employ all the labor power available, a division 
of the product results which is different from the preceding 
division. We may call this new divisional line the " specific 
product " line, as we may call the former line the old " specific 
product " line, but who does not see that this is merely a 
name for a line established by the real fighting power of the 
two parties? So long as both parties consent to maintain 
the distinction between capital privately owned and bare- 
handed labor, this namivg process may go on. Let there be 
in actual life a serious menace to property rights, and quickly 
the holders discover new " specific product " divisional lines, 
if thereby they may lessen the danger of a revolt. In a re- 
volt the holder is glad enough to save some of his capital, 
saying nothing at all about the " eternal income " springing 
therefrom. And it is evident that, if some day the empty- 
handed should finally and for all time determine to abolish 
the abyss, the forces of nature in water, soil, and machinery 
would still bring forth products when combined with labor, 
and that a wholly new species of " specific product " lines 
would emerge. Examine the conditions of social production 
in actual life, see the genuine powers and motives in the eco- 
nomic struggle, and you need not long be under much of an 
illusion as to what ultimately establishes marginal lines and 
marginal products. 

The like is true, if the labor force be held to be constant 
and the capital force be doubled or tripled. In Clark's Utopia 
wages in this case will go up and interest or rent will go 
down. All capital units must find employment at some rate 
of gain ; they therefore compete, interest or rent diminishes. 
But in real life will wages go up? Not necessarily, and not 
probably in the same ratio. Capital in real life is not under 
such an immediate necessity to compete as is labor. Any 
strike or lockout gives plain enough evidence of this fact. 
Capital can endure " waiting " for a much longer time than 
empty-handed labor. Apart from living labor capital rusts 
out in a few months. Apart from work empty-handed labor 



94 ETHICS AND ECONOMICS 

rots out in a few days. The sequel is not difficult to follow. 
Once indeed Prof. Clark lets us see this fact. " He (the cap- 
italist) has indeed an ultimate safeguard against starvation, 
which the laborer lacks; for by changing his plan of life he 
can use up his capital." (" D. of W.," 156.) Of course Prof. 
Clark can glide over this in a schematic representation of 
competition, but just this relationship is a most potent factor 
in causing actual economic divisions ; it tears into 
pieces that equality of competitive power implied in 
Clark's schematism; it contains more corollaries than 
there is time to draw. 

In actual life the " perfections " of Clark's schematic state 
are honeycombed through and through. If a large increase 
of capital be injected into society, what is the result? The 
enterprizer, not yet dead with us, finds more power behind 
him. He can more effectively contest the demands of the 
workers. Wages may sporadically go up, because there cer- 
tainly is competition among capitalists. So long as this com- 
petition of capitalists is effective, there is a tendency for 
wages to rise and for interest or rent to diminish. On the 
other hand as capital combines, the competition with petty 
capitalists becomes a force to depress wages still farther. 
The century-long struggle for an eight-hour working day 
shows in which direction the capitalist tends. 

It is needless to repeat the foregoing as regards the more 
complex and more real representation, the case when both 
labor and capital increase and decrease in all sorts of ways 
and combinations. The resultant situation rests with the 
relative power of the contending forces. The history of 
economic evolution contains the real answer, an answer which 
theoretical economics merely tries to formulate. From this 
history can be seen that the " perfect " competition of labor 
units and capital units is a mere fiction ; the perfect mobility 
of labor and capital is pure fancy; individualism, and the 
" specific " product of each element are schematic ideas which 
touch only a fraction of the facts. Labor unions, capital 
combinations, monopolies, labor laws, liability laws, all sorts 



CLARK'S PRODUCTIVITY THEORY 95 

and every sort of plans advised and contested ; and above all 
the power of capital to wait. 

Perhaps the best illustration of all this may be found in 
one of the latest contributions to this subject, Prof. H. L. 
Moore's "Laws of Wages" (Dec, 1911). Prof. Moore em- 
ploys abstruse mathematical methods to determine the close- 
ness of the causal connection between certain economic phe- 
nomena. Perfect causal connection is represented by 100%. 
The greater the departure from 100 %, the looser the causal 
relation. It is to be noted that a practically perfect corre- 
spondence between two series needs not establish a direct 
causal dependence of one upon the other; the two may be 
independent results of a common cause. Always therefore 
the concrete circumstances must be examined. Prof. Moore 
seeks to make ground for the Clarkian productivity theory 
by statistics. 

He deals with the French coal industry, — the only case for 
which he could find statistics adequate for treatment by his 
methods — in the matter of the mean daily rate of wages and 
the mean value of the daily product of the labor. From 
tables covering fifty-six years he finds that the correspondence 
between the mean daily wages and the mean value of the 
daily product at the mines shows the " very high rate " of 
84.3%. How then determine from this that the wages paid 
represent labor's creative contribution or specific product? 

One is here involved in the ambiguities of reciprocal caus- 
ation, the wages influence the value, and the value influences 
the wages, or both influence the governing motives of the 
personal actors in the struggle. Now an examination of the 
tables made by Prof. Moore shows that both wages and values 
at the mine steadily advanced ; that the wages gradually 
claimed a larger per cent, of the mean daily value, rising 
from 41.9% to 49.6%, extremes being 37.1% and 
52.1%; that for the entire period, wages claimed an 
average of about 45%; that the fluctuation of the 
mean daily values was much greater than that of the 
mean daily wages. 



96 ETHICS AND ECONOMICS 

That wages gradually claimed a larger percentage of the 
value of the mean daily product seems significant. One is 
again confronted with sliding margins, sliding creative con- 
tributions. The circle of value causation is entered; valua- 
tions by the empty-handed are on a par with those of the 
possessing speculator. " Specific products " is only a name 
to indicate the parts of the product which the fighters are 
able to secure for themselves. 

That the mean daily wages fluctuated much less than ihe 
mean daily value seems to indicate that for some reason the 
steadier causal element in the contest was wages. The case 
concerns the product of a staple necessity, coal, under con- 
ditions wherein labor plays a relatively conspicuous role. The 
connection between the product and the labor was easily seen; 
this knowledge was the basis of an incentive to demand a 
fuller correspondence. Under our exchange economy the 
wages would be paid before the sale of the product. Outside 
competition would tend to keep down the final prices paid 
for the coal at the mines. In the long run the producer must 
make his costs. For continuous production the miners 
might often be in a position of advantage. Labor, always 
nearer the starvation line, would not so readily vary its de- 
mands as would the speculators after a profit, even though the 
profit were not a large one. That wages gradually encroached 
on the mean daily value shows the same tendency. The 
great social changes, the dissolution of feudal privileges and 
of the attendant servile psychology, the growth of science -and 
complex machinery, all these would raise the status and stan- 
dards of the laborer; hence the upward sliding margins, or 
" specific products." 

The summation of these confusions on the economic fisld 
is this: — For the maintenance of social existence an eco- 
nomic product must be had and must be divided. Practically 
in any complex society the getting of a product out is pre- 
conditioned by some arrangement as to its division. Accord- 
ing to the idea of slavery, the product goes wholly to the 
slave owner, subject however to the external condition that 



CLARK'S PRODUCTIVITY THEORY 97 

for a continuous economy the slave must receive adequate 
support. But the meaning of '* adequate support " varies 
widely. When the slave market is full, the owner may find 
it much more profitable to him to work his slaves to a speedy 
exhaustion. History is full of such instances. Under serf- 
dom the lords must leave the serf sufficient time to get up 
his subsistence, if the economy is to be lasting. Here too 
history shows enormous variations as to the meaning of 
" sufficient time." Under the wage system the wage-earner 
also must have enough to maintain effective existence. Re- 
cent history and present-day facts show how elastic is the 
signification of this word " enough.'' The plainest direction 
to be drawn from the above signposts of history is that the 
division of the product rests upon the social fighting powers 
of the dividers. 

It is expressing the same thing in other words to say that 
such production-division contests always throw up what an- 
swers in substance to our wage scales, profit rates, and in- 
terest rates. These, as just indicated, differ widely and in 
concrete life and history vary enormously. They have in 
hard fact no fixity whatsoever. Yet these scales and rates 
are the usual standards of right and /ai'rjt ess/ they are objects 
to which "intuitions" and the invocations of absilute ethics are 
commonly directed. Just as it is a kind of ludicrous narrow- 
ness in a slaveholder to become passionate over his eights 
in his slave property, so it is equally ludicrous and ridiculous 
to talk of right and fairness in wages, profit, and interest, 
as if there were any finality " desirable and morally justi- 
fiable " about them. 

Now Prof. Clark obscures these genuine facts — he has in 
this matter the long line of distinguished, if less dextrous, 
bourgeois economists as predecessors. Just as the slave- 
holder passionately defends by law, ethics, and gospel his 
fractional views, so Clark finds his " natural scientific law of 
distribution " to be " desirable and morally justifiable." The 
slaveholder finds private ownersh'p of (human) productive 
property as an established, sanctioned, " sacred " fact. Clark 



98 ETHICS AND ECONOMICS 

finds private productive property as an established fact, " sa- 
cred " according to Leo XIII. The slaveholder finds estab- 
lished scales and rates; so too does Clark. The slaveholder 
measures productivity of capital and of labor; so too does 
Clark. To be sure Clark adds refinement to refinement, so 
that he leaves the slaveholder far in the distance. But the 
two procedures, the coarse and the elaborate, are in essence 
alike. Each seizes and fixates a transitory, merely momentary 
phase of the living contest. Elements such as scales, rates, 
private possession, empty hands, population, and psychology 
are assumed schematically as fixed. What wonder then if 
" specific products " emerge, each traced exactly to its proper 
agent! It is a matter of mere verbal consistency. Within 
such schemata there can not possibly be any exploitation at 
all : Marxian " surplus value " is there a mere dream. Living 
facts of progress brushed away the webbery and the ethics 
of the slaveholder. Living facts of progress cancelled the 
like figments of feudalism. Sweep away the " sacred " private 
ownership of productive property, then profits and interest 
as ordinarily understood vanish as mists, while Clark's beau- 
tiful elaborate schema is added to the number of outlived 
abstractions. 

No doubt that if the chasm between the possessors and 
the dispossessed be ever filled up, then still material power, 
labor power, products and divisions will occur. New schemes 
and principles of division " desirable and morally justifiable " 
must arise. But then the new " desirable and morally justifi- 
able " will have displaced the old approved of by Clark. Indeed 
the solid truth is that the essence of socialistic criticism is the 
demand to sweep away capitalistic economic and ethical 
schemata and to substitute others in their stead. For slaughter, 
there was slavery ; for slavery, serfdom ; for serfdom, the wage 
system ; for the individualistic wage system, there is the vision 
of a social co-operation which shall conserve the individual 
more fully and more completely. It is not merely increased 
productivity at any cost, as many seem to think, but a pro- 
ductivity increased by a heightened consciousness and a 



CLARK'S PRODUCTIVITY THEORY 99 

consciousness heightened by an increased productivity better 
distributed. 

II. CONFUSION OF ETHICAL TESTS 
Imputation versus Creation 
Prof. Clark's " Distribution of Wealth " may easily be ac- 
cepted as rather notable from the view-point of economics, 
" epoch making " if his friends will. He has knitted together 
into close meshes many economic threads seemingly but 
loosely connected by earlier economists. Interest, wages, 
profits, rent, consumer's values, final or marginal utility, 
labor and " sacrifice " measures, in all these he has shown a 
oneness or interdependence quite striking indeed. As was 
the case in all other sciences, economics was at first deeply 
immersed in real relations; witness geometry and concrete 
land problems, for example, those of ancient Egypt owing to 
the fertilizing inundations of the Nile. Gradually each sci- 
ence takes on an abstract schematic aspect. Prof, Clark has 
furthered this abstract advance in economics. His efifort is 
remarkable enough. He has shown how under his postulates, 
those of the classic economists refined by his heroic abstrac- 
tions and generalizations, a distribution of wealth in an ab- 
stract schematized society nia}'^ be conceived as a necessary 
resultant. With this academic problem solution there is here 
positively no quarrel, rather an admiration for Prof. Clark's 
skill. Neither would there be any quarrel with an attempt 
to use under suitable limitations this abstraction as partly 
descriptive of present society. But Prof. Clark is not con- 
tent with the analysis and description of the economic pro- 
cess. He must needs wring in the ethical questions in- 
volved in distribution. It is this aspect of his book which is 
objectionable. He seems to present his ethical views with 
a finality and generality which can not be admitted. For after 
all, his ethics are merely bourgeois ethics, as phenomenal as 
those of any other system ; they are adapted to his economics. 
In short, his " Distribution of Wealth " gives an excellent 
illustration how economic relations get themselves trans- 
figured into ethics. 



100 ETHICS AND ECONOMICS 

Prof. Clark generates an ethical confusion by leading us to 
expect in his " natural, scientific law of distribution " 
something different from that which we actually find. We 
look for a result which shall be independent of human social 
relations, almost as independent as are astronomical laws. 
He helps us to this interpretation by comparing his laws with 
analogies drawn from the motion and rest of particles of 
water in a reservoir, and from an ocean level guaranteed by 
gravitation and fluidity amid all fluctuations of calm and 
storm. The language he uses furthers the same illusion. He 
tells us, " If each productive function is paid according to the 
amount of its product, then each man gets what he himself 
produces. If he works, he gets what he creates by working: 
if he also provides capital, he gets what his capital produces, 
etc." " Is that which we get and which the civil law enables 
us to keep really our own property by the right of creation ? " 
"A plan of living that should force men to leave in their em- 
ployers' hands anything that by right of creation is theirs 
would be institutional robbery, * * * ". 

Now we submit that Prof. Clark here leads us to expect 
that clear creation is to precede division, is to be the guar- 
antee of the correctness and " honesty " of the division, and 
is to lie wholly outside of human institutions in order to 
avoid " institutional robbery." " Specific productivity " helps 
along this idea. One somehow seems to see the product of 
labor and the product of a machine ; the product called profit 
requires strong imagination, and even more imagination is 
required to see the creative power which begets the interest 
on a money loan. Still we look for this creative power as 
distinct from mere division power. Ere long however Prof. 
Clark finds new terms. We learn from him to substitute for 
"create," the words "ascribe," "attribute," "impute." 
Prof. Clark's theory of distribution according to creation be- 
comes a theory of distribution according to imputation. For 
Prof. Clark distribution according to creation may not be 
different from distribution according to imputation, but for 
most of us an imputation theory is apt to suggest powers 



CLARK'S PRODUCTIVITY THEORY 101 

and ethics different from those involved in a creation theory. 

Prof. Clark himself shows this confusion of imputation with 
creation in his farm illustration. In this illustration, " Land 
makes its own addition to the product of each unit of labor, 
except the last one." (" D. of W.," 195.) Now why this " ex- 
cept the last one "t As a fact of nature is not the land at work 
all the time? Could the last unit of labor produce anything- 
apart from the powers of the soil? And if the population of 
the society be increased, has not Prof. Clark taught us that 
poorer and poorer land will be utilized ; that wages will go 
down and that therefore additional units of labor can be put 
upon the farm, so that now in this latter case, the farm " land 
will make its own addition to the product of each unit of labor, 
except the last one." " When there was available only a 
piece of land with no labor to till it, the product was nil. 
When one unit of labor combined itself with the land, the 
product was AB : and in this form of statement we impute 
the whole product to labor" [italics ours]. The land in this 
case therefore creates nothing. Will the farmer say so? 
He concludes this particular paragraph : — " The science of 
rent is a science of economic causation, which traces product.s 
to their sources. The rent-getter is a product-creator." 
Thus the imputation and the attribution of the opening of the 
paragraph become creation at its close. 

That Prof. Clark means the reader to regard creation as 
some thing other than imputation is perhaps clear from such 
passages as the following : — " * * * the primitive law 
which puts a man face to face with nature and makes him 
dependent on what he personally can make her yield to him 
is still, in essence, the law of the most complex economy." 
(" D. of W.," p. 37.) This economic man redivivus will cer- 
tainly never be troubled by creation theories or especially by 
imputation theories of distribution. It is only when he be- 
comes " empty-handed " in a social organization which pre- 
empts all nature round about him that imputation theories 
begin to flourish. The primitive hunter needs not raise any 
ethical question about a division with nature according to 



1G2 ETHICS AND ECONOMICS 

creative contributions. Indeed Prof. Clark finds in such 
cases, " Hopelessly merged is the contribution of labor and 
capital in the case of the independent producer." Yet 
the " primitive law is still in essence the law of the 
most complex economy." " We impute to the first unit 
of labor the whole product," for the land alone gives 
a product " ?;?'/" 

What Prof. Clark has done is to show more or less success- 
fully how easily one can under his presuppositions " impute" 
products to various agents as " creations " of their own. He 
has translated the ethics of imputationism into those of cre- 
ationism. Imputation devices do not arise when man him- 
self owns the tool and the product. Indeed the tool is then 
only an extension of his own personality. The man absorbs 
the instrument, and not as with us, the machine the man. In 
respect to this one point the customs of many savages repre- 
sent a higher appreciation of the worth of an individual 
compared with that of a tool than do our own machine-made 
ethics. But what will you have? — Ethics must follow the 
modes and instruments of production. 

Assume an individual man, " empty handed," face to face 
with nature. No one would think of questioning the right of 
this man to whatever product he achieves, no matter how his 
empty hands miraculously or otherwise filled themselves with 
tools and implements however complex. For a man imagined 
as so situated, one easily falls into the illusion of absolute 
rights. This same illusion Prof. Clark would carry over into 
the case of the empty-handed laborer in a complex social 
economy. " Imputation," so potent in our present society, is 
regarded as the equivalent of " creation " in the case of a 
person face to face with external nature. The ethical trans- 
ference and confusion is complete, and it is all in conformity 
with " natural " law. Only, in the one case the " natural " 
law is the physical force of the individual face to face with 
outer material powers ; in the other case the " natural " law 
expresses material energy combined with labor power, but 
controlled or dominated by social forces. 



CLARK'S PRODUCTIVITY THEORY 103 

The anxiety to establish creation as the test of " honesty " 
in distribution springs from an instinctive perception of ac- 
curacy. One feels the ethical difiference between man and the 
brute powers of nature. One raises no objection at seeing 
a man wrest from material nature an abundant supply. In 
such a contest between man and the outer world human 
sympathy does not blunder. In the case of man wringing 
from man a large overplus of products a different set of feel- 
ings is aroused. With man and nature arrayed in battle, 
labor, mental, moral, and physical, is the significant element. 
Nature has no rights ; man takes the whole product. 

This instinct towards labor-creation ism gets a curious con- 
firmation in the mudd'ed expressions of many economists. Not 
a few of them refer to the increased productivity of economic 
progress resulting from improved mach'nery under such con- 
bination of words as, " the increased productivity of labor," 
" human labor aided by giant enginery and modern processes 
is much more efficient and productive than it was in former 
days," and so on. All this is either an instinctive feeling that 
creation is a superior test of " honesty," or else it is a dis- 
guised imputationism, which will read machine power as an 
output of labor on the part of the possessors of the machines. 

Indeed this imputation-creation is the key-pillar of the 
whole elaborate structure of the modern property doctrine, 
and of the bourgeois ethics correlated with it. The 
stockholder or bondholder of any concern sits idle as 
regards that business branch. Dividends are imputed to 
him as from creative acts of his own. His money has per- 
haps been turned into machinery; the powers of the machine, 
the tireless energy of electricity, coal, steam, of iron and steel 
are imputed to him, and transmuted into his power. The de- 
mand that creative effort be the test of the " honesty " of 
acquisition is satisfied by " ascribing," " attributing," " im- 
puting," to him the natural powers residing in material 
things. 

Imputation reaches out a long arm. Our laws of inher- 
itance furnish another instance. No one however heroic will 



104 ETHICS AND ECONOMICS 

be likely to assert that an heir or heiress is the creator of the 
wealth inherited. Ownership here is certainly nothing but 
social imputation. Similarly Prof. Clark imputes eternal life 
and an eternal income to capital units. Pure capital lives 
fprever though capital goods perish in the using. The eternal 
income of a pure labor unit appears to escape the necessity 
either of imputation or of mention. By imputation a machine 
virtually creates a new machine besides the further product 
distributed by creative attribution to the capitalist. The 
whole elaborate law of property bottoms upon this acceptance 
of imputation in the place of creation. 

Imputation ethics again are at the basis of the common 
critical reply to any suggestions towards distribution on lines 
different from those of the present. If for example any one 
suggests the expropriation of some of our property holders, 
be they kings, lords, captains of industry, or peasants, in- 
stantly the confusion between creation and imputation is 
stirred up for all it is worth. J. Ellis Barker in " British 
Socialism " sees no way of cancelling huge private ownerships 
without destroying " all the ethical foundations of society." 
Numberless others, such as Mill, Flint, Beaulieu, take prac- 
tically the same position. It is the stock-in-trade invective 
of the average ethical and religious defenders of our present 
bourgeois society, who treat ethical concepts not as reflexes, 
but as independent and even more objective than economic 
relations themselves. Any attempt to apply a visible creation 
test causes these persons to insist upon the imputation theory. 
No matter whether the property holders are to be bought out, 
taxed out, legislated out, or be simply expropriated, their 
demands and feelings, springing from imputationism must 
be satisfied ; their ethics of imputation are to be held to be 
superior to the ethics of a visible creation. These critics 
seem unable to perceive that their whole imputation theory 
is but a fiction seeking to justify certain indubitably powerful 
social relations of possession. It is the gloss, power is the 
reality. That power will use all ways and instruments 
to maintain itself. Imputationism is its ethical garb ; property 



CLARK'S PRODUCTIVITY THEORY 105 

laws, courts, and judges, are its legal garb; police, army, 
prison, and gallows are its physical guardians. 

In his authoritative " EncycLcal on the Condition of Labor," 
Pope Leo readies the same position as the economists but with 
much more subtlety. Speciously indicating a thirteenth cen- 
tury abstract individualism, he emphasizes labor creation 
as the source of property. Confounding natural law and 
divine revelation, by extending paternal personality through 
children he slides gently into imputationism and thus guards 
testamentary dispositions of productive property. Delicately 
suggesting the application of physical force by the state in 
support of religion and morals, he thereby sinks easily into 
the general acceptance and maintenance of existing exchange 
psychology. He comes finally to the benignant recom- 
mendation that society adopt such an interpretation of prog- 
ress as to secure to the papal throne its present power and 
to enhance its influence and prestige still further. The raw 
suggestions of the economists are refined and etherealized by 
Pope Leo, but the net result and the purport of the two 
representations are the same. 

The essential idea of productivity theories glides with readi- 
ness into a fundamental ethical confusion. The conception 
places man upon exactly the same level as that of a machine ; 
or otherwise put, it clothes a machine with the attributes of 
a man. In spite of the facts that the machine is a prey to 
the destructive forces of nature, that it never will of itself 
produce a jot or tittle, that divorced from active human labor 
the machine or tool remains dead, that the interest-getter as 
such does absolutely nothing towards utilizing the machine, 
yet the product is divided according to the contributions of 
the respective powers engaged, viz., man power and the in- 
herent natural forces of the machine. This levels the man 
down to the machine or the machine up to the man. Capital 
claims payment for the service of the machine. 

" Imagine," says Prof. Leroy Beaulieu, " a machine to be 
a living being capable of bargaining for himself. No one 
would deny the justice of his claim to a share of the extra 



106 ETHICS AND ECONOMICS 

production or profit due to his agency. Yet the maker or 
possessor of the machine has precisely the same rights as 
the machine itself would have, if it possessed life and intelli- 
gence." Prof. Beaulieu has been much praised for this so- 
called keen ethical defense of the natural productivity of 
capital. Numbers have seized upon this passage as giving 
an adequate and final reply. It seems so pretty and neat. Pity 
it is that it is so transparent! The first part of it has no 
meaning except as a cloaked appeal to the creative contribu- 
tion test. It is an admission that only labor has claims to 
rewards. Nature has no rights against man. The second 
part is merely a repetition of the substitutionary trick. Front- 
ing the active laborer the machine is clothed with the rights 
of persons; thus the machine is humanized. Then by sub- 
stitution the persons owning the machines take the place of 
the machine-persons ; everything is placed thus on a personal 
basis, and hence no fraud can enter. But it is all a mere 
device of force in order to claim that the output of machine 
power may count as the labor output of the capitalist 
owning the machine. The distinction between man and outer 
nature is cancelled. Imagine a machine possessed of life and 
intelligence, capable of bargaining for himself; that is, cancel 
the distinction, and cause nature to act according to capital- 
istic exchange economy, — surely a pretty device. Having 
then clothed this figment-person with rights, cause it or him 
to enter into ethical relations of right and wrong with real 
persons. Prof. Beaulieu may be content with such perhaps 
unconscious thimble-rigging, but the ledgerdemain is too 
open. In no wise can machine power be twisted into being 
the factual labor output of mere owners as such. In 
no wise can you clothe things with rights. The rra- 
terial powers of natural agents are one thing. The 
mental and physical powers of man are another thing. 
From the human point of view the ethical chasm 
between the two is unbridgeable. Nature knows no 
ethics. Man alone has ethical relations within his 
own kind. 



CLARK'S PRODUCTIVITY THEORY 107 

But the voidance of the creative test is not the sole imputa- 
tion device involved here. We have seen that real capital is 
of itself a dead, decaying thing; it never escapes nature's 
ravages. Yet the capitalist owner manages to dodge this 
natural necessity. Not merely must his capital escape these 
natural ravages, it must yield him profit and interest besides. 
He escapes the loss from natural decay, he escapes the labot 
and care of guarding against these destructive forces, his cap- 
ital remains intact ; but besides this he reaps a profit or in- 
terest. Does nature meanwhile cease its ravages? By no 
means. Decay is as inevitable as death. Clark speaks of the 
eternal life of pure capital, yet the real seats of actual material 
powers dissolve, disintegrate, fade away into nothingness. In- 
terest as the reward of the eternal life of capital means that 
the burden of blockading the destructive forces of nature 
is shifted. Some one else must make good the natural loss, 
must perform the labor of guarding against attack. The sub- 
stitutionary trick goes farther than a mere attribution of 
machine power to capitalists as their labor output ; it manages 
also to shift upon the shoulders of others the loss by natural 
decay and the labor of guarding against loss. Not merely 
must the empty-handed support themselves, they must also 
make good to the capitalist the loss from natural decay and 
the labor of guarding so far as possible against that decay. 
So far forth, every sinking fund or depreciation fund of a cap- 
italistic enterprize is a shifted burden, is an extension of the 
trick of satisfying by substitution the requirements of the 
creative test. 

III. "INSTITUTIONAL ROBBERY" AND INTEREST 

Various quotations from Prof. Clark's book have shown 
that he abhors the idea of "institutional robbery." He 1 ads 
one to expect that his " natural " law of distribution abates 
any such charge; he commends his law as "desirable and 
morally justifiable." In the end he leaves with one the idea 
that the charge of " institutional robbery " is without f 3Un~ 
dation, at least so far as concerns his " static state." Now 



108 ETHICS AND ECONOMICS 

commonly institution means " an established order, principle, 
law, usage, method, custom, or element of organized society." 
According to these words Prof. Clark can hardly deny that 
his schematic law of distribution is almost completely insti- 
tutional. 

That Clark's law is institutional is plain from the fact that 
private property in the means of production is primary among 
his suppositions. The defense of private ownership is the 
stimulus of his ethical enterprize. Empty-handed labor and 
capital power front each other as an established order, usage, 
custom, and element of organized society ; they are institu- 
tions. Similarly the complete reference of each to himself 
alone for his economic welfare, free competition, mobility of 
labor and capital, rents, interest, profit, wages and so on. 
Likewise free contract, free exchange, market and other value, 
— all things which Clark's abstractions deal with find their 
actual manifestations in the tumult of our daily lives. Clark's 
whole schema is accordingly " pure " institutionalism. 

Whether one shall speak of institutional robbery must evi- 
dently turn upon the test that is to be applied. Unless a 
test be agreed upon, discussion is apt to be mere wind- 
mongery. Prof. Clark himself gives the test which we are 
perfectly willing to accept, " to each what he creates." In 
dealing with economic goods failure to satisf}'- that test shall 
in general be called robbery. 

Now what is the meaning of this word, "create?" What 
else in an economic discussion than the output of an energy 
equivalent in some sort to an output of labor power? The 
test is for the sake of ethical judgments in economic matters. 
Laborers entering into the productive process have with us 
an ethical status. This ethical status imbues everything per- 
taining to the productive process with an ethical quality, im- 
bues wages as part of the product, and therefore all other 
parts of the product. Hence all the theoretical labors to de- 
rive interest and profits from the natural productivity of 
capital ; hence the anxiety to soften the opposition between 
classes, and to minimize or to justify what are known as the 



CLARK'S PRODUCTIVITY THEORY 109 

horrors of class struggles ; hence the zeal to point out the 
productive functions of those not plainly engaged in the 
creative process. 

If we hold fast to the idea that in " creation " there must be 
an output of energy equivalent to an output of labor power, 
and turn neither to the right hand nor to the left hand of impu- 
tationism, then every bit of pure interest, to say nothing of 
profits, paid to the owners of capital, is institutional robbery. 
Whether interest be regarded with Clarkians as the product 
of the material powers of capital, just as wages are regarded 
as the product of the labor powers of laborers, or whether 
interest be taken more grossly, as merely payment for a money 
loan, in neither case does the interest-getter make a positive 
contribution to the productive process. As mere money- 
lender, waiting around for some one caught in a " squeeze " 
or for some daring speculator embarking on more or less 
unknown seas, he plainly does nothing positive in getting 
out the goods, a part of which he takes as interest. Hence 
in part the age-long abhorrence of the usurer. As mere 
owner of capital, again the interest-getter does nothing. In- 
terest as the product of his machines is not the product of 
his labor. Certainly this is transparently the case with all 
inherited and donated capital or wealth, an immensely large 
fraction of the accumulated wealth of our western civilizafon. 
Even the accumulator of capital from his own labors can not 
collect interest as springing from active energy in this matter 
on his part: his capital is his pay for his real labors, just as 
wages are the pay of the laborers. Not to have consumed his 
whole product enables him to dispose of his time otherwise 
than in a renewed search for sustenance; he exchanges one 
mode of life for another. That our present society 
contains for him the possibility that by accumulating 
capital he can gather interest, no more makes him 
the outputter of the energy which creates the in- 
terest, than the saving of the slaveholder makes him 
to be the outputter of the labor of the slave whom he pays 
for with the savings. 



110 ETHICS AND ECONOMICS 

Clear as the matter is concerning interest as a product of a 
process, it is thought to be changed by looking frOm a point 
of view anterior to a particular process. Make a narrow ab- 
straction, that is, shut out consideration of anything except 
merely the particular process and its product, then evidently 
that process and that product can not occur apart from 
laborers, capital, and the owning capitalist. Suppose further 
that the capitalist has actually accumulated his capital by 
the practice of all the present-day economic virtues. Within 
this narrow abstraction : no product without labor, but also 
no product without capitalist; hence, union of forces and re- 
ciprocal gratitude; on the side of the laborers, because the 
union of forces kept them from starving from lack of work; 
on the side of the capitalist, because from the union, he was 
able to fructify his capital by others' labor, and thus to secure 
a product without further work on his part. 

Plausible as is this narrow abstraction, it would deserve no 
notice, were it not for the fact that it constantly appears in 
some minds; it is too manifestly framed so as to contain the 
conclusion desired ; the vague thought behind it is the su- 
periority of capital — the social power of possession will put 
itself through. Capital as an economic category is inferior 
to labor and remains so. Life is maintained by a continual 
output of effort in using up suitable natural objects. Biolog- 
ical evolution shows in the lower animal world an almost 
mechanical adaption of life-forms to environment. With man 
economic life begins. Dimly purposeful at first, human labor 
molds natural objects into tools and instruments, adapting 
nature to its own ends. If we call such tools from the simplest 
to the most complex by the name capital, as is commonly done, 
then capital is the product of labor, and it must somehow be 
always measured in terms of labor. This is self-evident 
when you place man " face to face with nature," not merely 
individually, but also in large masses as with primitive peo- 
ples. Nor can any amount of capital however large acquire 
any natural precedence over labor. No sooner are material 
goods finished than they begin to decay. Stop all labor in 



CLARK'S PRODUCTIVITY THEORY HI 

a civilized society for one day, and the distress would be in- 
calculable ; for a week, and the overwhelming majority of that 
society would be dead. It is therefore wholly idle to think 
even for a moment that capital can have physically or physi- 
ologically the precedence attributed to it. Step from the 
narrow abstraction into the real world; analyze the forces 
there at work; trace tendencies, observe results, and you 
quickly learn to what sham uses abstractions may be put. 

The case just cited is only an aspect of the not uncommon 
rejoinder sanctioned even by technical economists, and con- 
tained implicitly in Pope Leo XIIFs Encyclical on Labor 
(1891). If capital without labor applied to it is a dead decay- 
ing thing, not less in our society is labor without capital 
utterly unproductive. The further implication is that since 
no one would think of denying to the laborer a return for his 
work, so no one can with equity refuse a proper reward to the 
capitalist. 

It is easy to trace here the ethical and economic confusions 
with their corollaries to their primal springs. It is a truth 
of physical causation that capital force, that is, machine f jrce, 
and human force must unite to secure an economic product. 
It is ethically and economically true that the laborer is worthy 
of his hire. It is true that in our society law maintains the 
chasm between the empty-handed and the tools and fields of 
production, and hence that with us labor without tools is 
utterly non-productive; nay more, attached as it is to a sen- 
sitive living body, having thus a kind of initiative, it may 
from other causes become a rebellious, revolutionary, de- 
structive agent. It is thus true that in our society property 
laws guarded by army, police, jails, and gallows necessitate 
that laborers and capitalists unite in order to bring forth an 
economic product. It is thus true that by reason of force in 
our society the powers of the machine are imputed to the 
capitalist. It is false that the necessities of physical caus- 
ation and /eg-al necessities are identical. It is false that con- 
clusions drawn from the one relation can be transferred to 
the other relation. It is false that the ethical character of 



112 ETHICS AND ECONOMICS 

labor and of capital are on a parity ; material nature has no 
rights against man. It is false that the union of laborers and 
capitalists is necessary to production by modern methods. 
National workshops in navy, army, railroads, the postoffice» 
municipal ownership of production, distribution, and ex- 
change agencies of all sorts, — a full list of which socialized 
activities would require pages to catalogue — upset the prop- 
osition completel3\ It is therefore false that the permanency 
abiding in the physical causation of machine force plus labor 
force abides likewise in the union of laborers ard capitalist >. 
A change in the property laws of otir society, and they are 
changing all the time, would dissipate this legal necessity, 
together with all technical economic principles which formu- 
late economic relations founded upon this legal necessity. It 
is false that the ethical quality of interest as the return to 
capitalists rests upon the same foundation as that of wages 
as the reward of the laborer. It is false that the capitalist 
manifestly satisfies the test of a creative contribution. The 
ethical and economic confusions in the capital productivity 
theory arise from an undiscriminating mingling of the above 
propositions, — this, together with haunting memories of the 
virtues of saving, abstinence, self-control, and a multitude of 
other ethical precepts expressive at bottom of the actual con- 
stitution of our society, but treated as if they were inde- 
pendent of any economic substrate. 

The creative contribution of the capitalist as such is the 
bottom question. Imputationism blears the vision. Loose 
laudation of economic and other virtues dulls the eyes. Pure 
interest is an income arising from possession as such (Bcehm- 
Bawerk). Still economists, and of course capitalists, revel 
in the virtues and the necessity of the capitalist as such. He 
is clothed with the merits of the industrious enterprizer, of the 
abstinent saver, of the patient stayer and waiter in round- 
about processes; he is dowered with foresight and initiative; 
he heroically shoulders the burden of every advance, and at 
his own risk and expense tries out for all society the ex- 
periments which make for the uplift of mankind; above all. 



CLARK'S PRODUCTIVITY THEORY 113 

he supports from abundant stores with mobile hands, hos- 
pitals, universities, bread lines, homes for fallen women, and 
softens the lot of the deserving poor by doling out charity 
and ennobling labor. The picture is motley ; it contains man- 
ifold elements of truth ; and yet the whole is, as it were, a 
nest of ethical and economic confusions. 

What then is the function of the pure capitalist, whether 
in economic production, distribution, or exchange? He does 
nothing at all but sit at the entrance of the fields, collecting a 
tribute from workers of every sort. " The vineyard is mine ; 
so says the law; enter, reap the fruits, but pay me a portion 
of the product. Otherwise abide without my gates; seek 
other sources of supply, as by law you are free to do; 'tres- 
passers beware.' " The pure capitalist is the mere investor. 
The mere investor puts money into a business with whose 
characteristic product, management, and details, he has 
absolutely no concern. He simply takes as interest a fixed 
percentage of his capital investment together with his cap- 
ital returned at the close of the engagement. What does the 
capitalist as such actually do? You shall not here praise the 
merits of the farsighted enterprizer; the enterprizer as such 
is not a capitalist, he is a kind of worker. So far as any 
capitalist is also an enterprizer he gets profits as his pay. 
You shall not here praise the self-control of the abstinent 
saver; his capital is his reward; interest is an additional sum, 
not sprung from saving abstinence. You shall not here con- 
found physical and legal necessity, nor substitute imputation 
for creation. It is true that labor force and machine force 
must unite to secure an economic product; it is true that by 
law laborers and capitalists in our society must unite to 
secure a product, and hence by imputational ethics backed 
by force, capital and labor, and hence capitalists and laborers, 
are put into the same ethical category. But this shows no 
creative contribution on the part of the capitalist as such. 
This is true whether the silent stockholder be connected with 
productive, distributive, or exchange activities. He reaps 
interest without labor on his part. On the surface the burden 



114 ETHICS AND ECONOMICS 

of the advance is borne by the enterprizer, at bottom it is 
borne by the army of propertyless workers. The capitalist 
as such insures himself as far as possible against all risks 
and hazards. The state is simply this ; in our society property 
laws maintain the chasm between labor and capital; the 
hungry army of the empty-handed are there to be despoiled. 
Enterprizer and capitalist alike cry out: "Behold the land is 
flowing with milk and honey, let us enter in and despoil the 
possessors, the creators of these goods." Interest is a claim 
to a part of the spoil, because the capitalist has furnished to 
the enterprizer the knife or the gun with which he fells the 
real creator. 

Professional economists have suggested that they could 
easily conceive the case where capitalists spent their in- 
come so well as to deserve it, even if they did not produce it. 
Suppose this the case ; evidently however to such " cap- 
italists " and their income, the test, " to each what he creates," 
is not applied. On the face of the proposition according to a 
strict application of the Clarkian test their income is robbery. 
But there are other tests it may be said. Granted. There have 
been caste tests, blood-descent tests, and many others, which 
have more or less sunk in vigor. Examine this newer one of 
* spending so well as to deserve their income without produc- 
ing it' What does "well" here mean? "Well" as tested by 
what results, social or individual? Under what conditions and 
by what means do the " capitalists " get hold of their incomes? 
Do they form a separate social class, and if so how are they 
selected? Are these excellent spenders really capitalists, that 
is, private owners in a property-guarding society, with the 
mass of productive sources preempted, a reserve army of 
empty-handed, everybody for himself and the devil for all? 
Is it a mere fancy which we are to accept as easily as we may 
accept the pulpit truism, * if men were only good, our social 
evils would all cease' ? True but useless test. The solid 
problem comes back: What decisive forces exist in present 
society other than the economic drivers in class struggles 
to compel social amelioration? History knows none. We 



CLARK'S PRODUCTIVITY THEORY 115 

have however seen no recent economist strongly praise the 
spending of our present-day capitalists. 

Akin to the above is the following: — "The incomes from 
property and from stocks are, in a national exchange economy, 
not to be dispensed with as a spur to the formation of cap- 
ital, and as a sequel to fortunate enterprize and speculation, 
and are not to be suppressed without injury to the interests 
of production." (Philippovich : " Grundriss der Politischen 
Oekonomie." Bk. 5, p. 207.) 

On the surface, the statement is circular. "A national ex- 
change economy" means just such an economy, where under 
a pretended economic self-dependence, exclusive ownership 
of property and stocks has interest as the spur to greater 
accumulations in order to secure like returns; where enter- 
prize and speculation are rampant for profits; and where, 
since production as with us drives for interest and profits, if in- 
terest and profits were suppressed, then other things un- 
changed production must certainly suffer; for — no profits, no 
production. The statement however shows no satisfaction by 
the capitalist of the creative contribution test, nor does it in 
the slightest degree abate the charge of that exploitation 
which springs from the power of exclusive possession to 
" stand pat." The statement tacitly admits that the real 
source of interest and profits is, not those " natural " elements 
sought for by Clark and others, but rather the love and the 
power of extracting gain. It is therefore not past nor present 
production which creates interest, nor the labor contribution 
test which gives to interest an ethical sanction. The defense 
suggested here shifts economic grounds and changes ethical 
tests. The idea would seem to be : — without interest, suf- 
ficient capital would not exist; without sufficient capital, no 
adequate production ; without adequate production, no social 
progress, rather social retrogression in all lines. Such a de- 
fense, (a) repeats the confusions already noticed ; (b) con- 
tains a large illusion about capital ; and (c) confounds the 
economics and the ethics of quite dissimilar social environ- 
ments. 



116 ETHICS AND ECONOMICS 

(a) The representation is haunted by the confusion of 
material necessity and legal constraint. Undoubtedly in- 
crease in population and increase in production demand to- 
day increase of capital power, that is, more tools, machinery, 
and so on. This is physical necessity. Hence from the legal 
relations in our society, capitalists are indispensable, and 
hence again with us from psychological necessity, the need of 
interest and profits as a spur to form by enterprize, by specu- 
lation, and by increase of production, more such absorbent 
matter as capital. For at any one moment the vast majority 
are in fact armied off from productive fields; their incomes 
are scant; their surplus is small; undertakings are beyond 
their economic power. The actual initiative must lie with 
the possessors, the capitalists; without interest or profits in 
sight, these persons will not move. Even the national gov- 
ernment must except in special cases proceed in the same 
general manner, that is, as an individual in the presence of 
other independent individuals. From this it apparently fol- 
lows that with increase of population, unless the nation retro- 
grade, increase of capital must come from the capitalist 
class, and hence that the function of the capitalist is so to 
save and so to spend that capital shall always be forthcoming 
when really needed. Transparently however the keystone of 
this social arch is the legal relations actually existing with 
respect to ownership, and especially the ownership of produc- 
tive sources. Physical and psychological relations are not 
disputed, but it is the legal relation which gives force and 
significance to the proposition that the capitalist must exist 
in order to furnish capital. 

(b) There is a large illusion both as to the nature of the 
" capital " advanced, and as to how the advance takes place. 
Since in concrete operation a tool must exist before it can be 
used, it is easy to fancy that somehow the full body of work- 
ing implements must actually exist before social production 
can begin. Hence the idea of the savings and the advances 
of the capitalists. Suppose a new enterprize is proposed. 
Capital and labor are necessary to put it through. The vast 



CLARK'S PRODUCTIVITY THEORY 117 

multitude, the labor army, can of themselves furnish neither 
capital nor credit. The capitalist must intervene; w^ithout 
him. the enterprize and its product would never emerge. But 
what in fact is the capital which he advances? Do the cap- 
italists instantly find or by a fiat create the new body of tools 
to be applied in this work? Not at all. No stock of prepared 
goods exists anywhere in such abundance as to enable cap- 
italists to make this pretended advance. The mass of the 
world's real physical capital, — factories, machinery, tools, 
raw material — is already tied up more or less in active 
service ; or it can not be moved profitably from where it now 
is ; — therefore for example the French machines for the 
Panama canal rusting away in swamps and other dump-heaps. 
Often enough the enterprize will require specialized ma- 
chinery ; more often it will require only a supply of labor 
force. It is not the money of the world, the diamonds, the 
art masterpieces, the luxury objects of the rich, which per- 
form or can ever be made to perform the creative work of the 
world, nor all the stocks and bonds and title deeds which 
burden safety vaults. Generally speaking, an " advance " of 
these things accomplishes in objective reality not a single step 
to the furtherance of a new enterprize. 

The genuine fact is that the maintenance of a continuous 
economy is impossible without an unbroken stream of income 
and outgo. Laborer, capitalist, and capital alike live from 
day to day by daily labor from the daily output of society. 
The fertility of land, of water, of the animal kingdom, the 
steadfast qualities of natural agents, the persistent recurring 
wants of man, the enormous potentialities of the intelligent 
movable labor power of the dispossessed nine-tenths of man- 
kind, — these constitute the social resources of any com- 
munity. Upon these things as the permanent foundation by 
means of legal relations the entire superstructure of the cap- 
italized wealth of the world is reared. Apart from law- 
guarded title deeds private capital mostly vanishes; nature 
with its powers remains intact : man with his labor power re- 
mains intact; objects of luxury and title deeds are of no 



118 ETHICS AND ECONOMICS 

avail to quench man's fundamental needs. Thus it is seen 
that labor applied to nature is the one significant thing, and 
that the capitalized wealth of the world is merely the cap- 
italized value of the expected products of the future labor to 
be applied to nature. 

The so-called " advance " of capital to a new enterprize is 
therefore only an order to change the point of application of 
labor power. A part of the unemployed or of the poorly paid 
employed is set to work. By additional labor some movable 
instruments are diverted from poorly productive fields. The 
tools for the new enterprize are created while you wait. The 
easy supposition of the old wage fund theory that the w.iges 
must be advanced, and that therefore a large store of con- 
crete goods must somewhere exist before social production 
can begin, is but the fragment of a schematic abstract idea. 
The truth is that society lives on its daily output. The legal 
position of the possessors enables them to control and to di- 
vert hither and thither parts of the incoming stream of con- 
sumption goods. This they turn to the support of the 
laborers who are in the act of creating the real capital, the 
machines needed for the new enterprize. The " advance " 
represents in general only the power, guarded by law, of 
possessors to play upon the necessities of the labor army, and 
thus to create out of the toils of others the new material 
instruments. 

This power is exercised by credit operations. The money 
of the world can do and does do only the veriest fraction of 
the business of the world. Relying upon the constants of 
nature, the wants of man, and the social guarantees of law, 
the possessors by exchange of credits turn the income stream 
this way and that, they wait, they pay as other elements 
renew the stream, and occasionally, if need be, they turn 
their enjoyable wealth, art objects, palaces, and so on, into 
others' hands. Thus through credit operations actual labor 
is made into concrete capital products. Capitalists take the 
glory of making the " advance," while in fact all they do is to 
shift through law and promises the application of labor power. 



CLARK'S PRODUCTIVITY THEORY 119 

Since our extremely complex social and business relations 
come to rest more and more upon credit, it is easy to see 
that an extension of credit capacity and worthiness, with a 
transference of such power from present holders to other 
organs of credit emission, could radically change the entire 
social structure, and hence abolish interest and profits as a 
spur to the formation of private capital. 

(c) Philippovich's circular statement might be taken to 
mean a bit of social history ; namely, that previous times have 
tried out other modes of capital formation, and that our pres- 
ent capitalistic mode has by survival proved itself to be better 
than any of its predecessors, and thus also ethically preferable. 

Without dwelling upon the rather easy assumption here 
of the superiority of modern " social welfare " over that of 
ancient times, it may be admitted that there is partial truth 
in the representation, without however too facilely adopting 
any laissez faire attitude in the matter. " Social welfare " is 
no simple static conception ; on the contrary it represents a 
highly coniplex idea and state conditioned by physical, psy- 
chological, economic, legal, and ethical elements, each of 
which is infinitely variable. Where tools are simple and 
modes and means of communication are slow, crude and 
primitive, economic activity, psychology, and ethics, must 
need be vastly different. Improved tools mean new eco- 
nomics, new psychology, new laws, new ethics, therefore, new 
ideals of " social welfare." You can as safely argue from 
past social conditions to present conditions as you can derive 
tactics for long-distance, smokeless guns from the structure 
of Philip of Macedon's phalanx, or rules for transcontinental 
flyer engineers from the procedure of an ancient foot 
packcarrier. So long as large opportunities were open 
for escape to productive fields, a possibility of 
equality of a kind remained for non-possessors, and 
one could readily enough assent that interest and profit 
more or less dominate social enterprizes. When however 
productive fields are preempted, inevitably non-holders are 
at the mercy of the holders. Profit and interest become more 



120 ETHICS AND ECONOMICS 

and more the fruits of exploitation pure and simple. Accord- 
ingly the confounding of economic states with one another 
passes over into an ethical confusion. If dropping the labor 
test we appeal to social results as justifying capitalism, then 
we have in fact claimed exploitation to be a right; we have 
thereby denied economic independence, and when we in other 
connections appeal to this economic self-responsibility, we con- 
tradict ourselves. If society gives anyone over to exploita- 
tion, it must also undertake some social care of the exploited. 
This means the more or less complete reversal of our individ- 
ualistic theories of government, a large abandonment of such 
theories as Clark's, the working out of new ethical tests: in 
short, an overturn of many of the so-called psychological, 
social, and ethical finalities. 

One must not confuse the enterprizer with the " pure cap- 
italist." Our institutions facilitate the operations of the en- 
terprizer as profit-maker, and though perhaps with utterly 
superfluous frequency the profits gained are. despite con- 
ventional law and morality, tainted through and through, 
still one can here easily enough screen the eye from too 
narrow an inspection. The enterprizer is manifestly busy, 
busy, busy, day and night. The devizer of a new process, of 
a new organization of labor power, of a new industrial or 
transportation combination, which shall result in an increased 
production, can quite as surely be regarded a creator as is the 
handworker or the common superintendent of the usual daily 
round. But no stretch of imagination can find positive cre- 
ative contributions by the pure capitalist as such. Rigidly 
tested, his interest gain is robbery, and it is institutional rob- 
bery. "Ascribe," " attribute," " impute," as subtly as you 
will, only do not apply the word " create " to the efforts of 
the pure interest-getter. 

But there is another way of testing the matter. Let us 
take another " heroically imaginative " state. Let Clark's 
" static state " become by miracle or otherwise a social labor 
state. What becomes of interest there? What, of the do- 
nothing capitalist? What, of the decorative kingships, duke- 



CLARK'S PRODUCTIVITY THEORY 121 

doms, lordships, privileges, and the millions of dollars of 
value forced by law and custom, that is, by institutions, into 
puny baby hands, which never in the course of years will do 
a solitary stroke of work, whether manual or brain-manual, 
but will rather, after full development is reached, be attached 
to a psychology of imputed finer-grained qualities such that 
* the deity will think twice before condemning such a gentle- 
man to perdition'? Gone into the limbo of outworn creeds. 
The psychology and the ethics of the predatory past having 
been outgrown, the test of creative contribution holds sway. 
Will the brain and manual workers in a labor state " he- 
roically imaginative " take more or less of the product cre- 
ated ? Everyone in that state labors productively ; whatever 
surplus he accumulates is the result of his own efforts. Every 
bit of pure interest collected in our society and in the Clarkian 
static state by pure capitalists is thus evidently deducted 
from the labor results of the real creators. Clark will hold 
rigidly to his abstractions. Hold then as rigidly to this 
other abstraction, and to the creative test. What else is then 
evident than that the interest paid in our present society is 
robbery and robbery by institutions? 

In a pure static labor state, every person puts in some 
genuine social labor. What thousands and thousands and 
thousands of persons who now either do nothing at all, or else 
minister only to the pride, vanity, and power of the wealthy, 
would add to the real quota of things and services having 
genuine social worth? As it now is, this army of privileged 
holders with their dependents and parasites must be supported 
in their luxuries and privileges by the real workers. Mate- 
rially and objectively considered, the present situation is in 
essence that of the old slave system. There the masterful 
owners lived on the product of slave labor. The exquisite art 
and literature of Greece, the vast and solid law of Rome, rose 
from and rested upon the sensitive tremulous flesh of slaves. 
Privilege to-day rests upon a like foundation. Slavery was 
an institution ; the wage system to-day is an institution. The 
army of private property holders and their dependents ab- 



122 ETHICS AND ECONOMICS 

sorb a huge portion of the results of social production. They 
do this because of institutions guarded by imputation ethics. 
Add this army to the real workers, would the total product 
increase? Would the share of each be on the average 
greater or less? 

The social labor state would of necesssity maintain its 
capital, that is, its productive machinery, intact. Plainly it 
must always provide by labor for an increase of capital power. 
Clark's state does more or less the same. But the social labor 
state would pay no interest on capital. It would not impute 
any part of the product to a merely do-nothing holder. Pro- 
fessors Boehm-Bawerk and Fisher will have it that in any 
complex economy interest must exist and must be paid. 
Even if we grant this contention, which certainly may be 
denied as regards the mass of present-day interest, as Boehm- 
Bawerk himself concedes, then in the fancied labor state that 
inevitable interest would no longer inure through the insti- 
tution of private property in productive instruments to the 
benefit of a privileged class; it would belong to society as a 
whole. The eflfect of such a disposition of this so-called in- 
evitable interest would be poles asunder from what to-day 
results from interest-taking; so much so that the phenomenon 
could no longer bear the same name, or have that meaning 
which is now the soul of interest. 

If the Clarkian law of distribution contain institutional rob- 
bery in its very make-up, however bright its imputational 
glitter, we need not detail here how these same institutions, 
private property in productive sources and the rest, intensify 
or develop into shameless nakedness the pitiless crimes com- 
mitted in the accumulation of wealth. The horrors that pollute 
history these thousands of years is the commentary. Athe- 
nian, Sicilian, Spanish, and Indian mines for slavery ; feudal 
serfdoms the world over; expropriat'ons, inquisitions; treach- 
ery and treason, guile and sycophancy; piracy, organized 
plunder, assassination by poison and by knife; cheating, mo- 
nopolies, forgery; purchase of kings, prelates, popes, legis- 
latures, and judges. It matters not what part of the world 



CLARK'S PRODUCTIVITY THEORY 123 

you take, Asia, Africa, Europe, the Americas, and the Islands 
of the ocean, wherever you find private property in productive 
sources, there you meet kindred ethical monstrosities. And 
no matter whether the psychology of the exploiters and that 
of the exploited acquiesce or revolt — the slave may find joy 
in his gilded chains or these chains may eat into his soul as 
with iron teeth — tested by creative contribution the exploi- 
tation goes on. Hell upon earth has generated and sustained 
the belief in a hell beyond the grave, and in a way it has 
justified the belief in its real existence after death. When 
one considers the milleniums of horrible crimes, indescrib- 
able atrocities, unspeakable treacheries and infamies, inspired 
by the lust for property, one may well ask Prof. Clark, — 
* Will all great Neptune's ocean and all the perfumes of 
Arabia cleanse and sweeten this murderous hand?' "It will 
rather the multitudinous seas incarnadine." 

IV. ETHICAL PURIFICATION BY "FUNCTIONAL DISTRIBUTION " 
Prof. Clark refuses to discuss the " pure ethics " problem 
which he suggests. He seeks to turn the " pure ethics " ques- 
tion from one dealing with the personal aspect into one of 
group division. " Grievances depend on personal distribution, 
but they are removed by a normal functional distribution." 
(" D. of W.," p. 7, margin.) " Whether labor gets what it 
produces or not, — a question of fact not of ethics" (" D. of 
W.," p. 8, margin.) Hence Prof. Clark's elaboration of his 
" specific productivity theory." Again he tells us (" D. of 
W.," p. 7), "Rights are always personal: and only 
a sentient being has claims, as only an intelligent 
being has duties." Yet we are to come out at the 
end with the idea that a functional distribution qualifies 
personal grievances. 

Prof. Clark is here merely staging another piece of sche- 
matic scenery. He divides his " static state " into a number 
of " groups." These " groups " stand for the various divisions 
and subdivisions of the complex parts and processes of the 
total production and distribution necessary to society, — man- 
ufacturers, carriers, bankers, laborers, together with all the 



124 ETHICS AND ECONOMICS 

subclasses of these. " Grievances depend on personal dis- 
tribution, but are removed by a normal functional 
distribution;" that is, if "groups" get by "a natural 
law of distribution " their true " specific products," then either 
ipso facto personal grievances are removed, or at least they 
are to be removed by other means. 

Now though it is true that ethical principles are general 
abstract propositions, yet until these laws or principles im- 
pinge upon individuals, their ethical quality has no genuine 
reality. "Animality," for example, has no independent ex- 
istence; only as embodied in actual birds, fish, quadrupeds, 
men and so on has it any true being. Accordingly, Clark 
by his method escapes personal grievances, only by taking 
refuge in an unreal abstraction. Besides this, he after all 
only runs round in a circle. For whence in fact come these 
"groups " of which he makes so much? Out of nothing but 
the living, fighting powers and relations of those who form 
the groups. Accordingly again. Prof. Clark really adopts or 
accepts as " groups," what in truth results from and also em- 
bodies those very grievances, of which in theory he would 
gladly be rid. He thus posits as a determining cause that 
which is really a product; he phrases it as schematically 
" pure," and of course verbally works back to a result just as 
abstractly pure. " Grievances depend on personal distiibutiDn, 
but are removed by a normal functional distribution." 
Surely, indeed ; only this, the actual grievances are real, the 
removal is merely schematic, a playing with words. 

In fact : ethical principles are always man-made ; they rep- 
resent or imply some sort of economic ideal or schema, which 
as a rule expresses some form of social class distinction. 
This is true also of Clark's. Now no abstract functional dis- 
tribution in any system can of itself, or does of itself, obviate 
in actual life a million-fold deviation from the ideal standard; 
witness the contests in every historical form of social or- 
ganizations. Nor has such a normal functional distribution 
according to one ideal the slightest validity against a normal 
functional distribution according to another ideal. Where 



CLARK'S PRODUCTIVITY THEORY 125 

the clash is between the ideals, to show the harmony of the 
parts of one system is not in the least to satisfy the demands 
of the other system. 

If rights, duties, in a word, ethics, concern the individual 
especially in his concrete social relations, let us turn then 
from Clark's abstractions to the actual workings from which 
the abstractions are derived. Prof. Clark will have an ethic- 
ally pure distribution arise from the functional interaction 
of " groups." What then are Clark's gods in this matter, 
and what is their origin? The powers in his functional group 
distribution are pure labor, pure capital, pure self-interest, 
pure competition, pure mobility, in short pure abstractions. 
Whence these abstractions .f* From real life relations, of 
course. Concrete labor, concrete capital, competition, self- 
interest, mobility, all these and others are manifest in open 
daylight. And how does Prof. Clark purify and cleanse them 
from ethical taint? By intellectual surgery. Labor power 
he divorces from all other connections bodily or mental. 
Real labor power has a delicate nervous attachment; it is 
tied to a stomach which has cravings to be assuaged, to a 
body sensitive to heat, to cold, to storms of sleet, to peltings 
by the sun, a body subject to gravitation, to chemical, phys- 
ical, and physiological powers. " If you prick us, do we not 
bleed? If you tickle us, do we not laugh? If you poison us, 
do we not die?" This labor body is even said to be ac- 
companied by mental and spiritual qualities, to have 
emotional, poetic, aesthetic attributes. At times indeed rather 
hyperbolically every human being is said to have an infinite 
worth. For the Clarkian functional distribution the laborer 
is nothing but the bearer of so much labor power, so much 
incorporated work energy ; nothing else counts. All other 
qualities and needs whether physical or spiritual are can- 
celled : even the influence of these other qualities and needs in 
determining the labor power, its application and results, is 
swallowed up in an abstract general or average. 

The like is true of real capital and the capitalist. Labor 
power is incorporated in the laborer; not so, capital power 



126 ETHICS AND ECONOMICS 

in the capitalist. Yet the capitalist also in disposing of his 
capital power is subject to and is driven by feelings and 
notions similar to these of the workers. But Clark's capital 
power is freed from all direct physiological connections with 
capitalists. 

In large part, Clark's method of purification is to set down 
a long-run average. In actual fact, labor and capital may be 
thought to get respectively, now too much and now too 
little; here, capital and labor move slowly and with difficulty; 
there, easily and with rapidity. Tabulate results, count up, 
and average. Pluses on one side cancel minuses on the other; 
in the long-run, averages come out which represent more or 
less nearly what Prof. Clark's purified abstractions or ten- 
dencies, if fully realized, would in fact produce. These aver- 
ages or norms, if not presenting Clark's tendencies and their 
results in full purity, contain nevertheless by far the larger 
part of the real truth in them. 

Now who does not see that the averages or norms so ob- 
tained, and the purified representations resulting from them, 
in no wise escape into an ethically pure realm? The facts 
that deviations caused by unfair pressure on the parts of both 
capital and labor may be represented by pluses and minuses, 
and that in mathematics plus amounts may cancel equal 
minus amounts, do not abolish the feelings involved, do not 
cleanse away the taint. The results may disguise what is 
only a continuous saturnalia of ethical impurities. Clark has 
removed his law of distribution into the realm of pure mathe- 
matics ; everybody knows how " pure " it is possible for 
mathematics to be, — and after a moment's thought, how com- 
pletely removed from real ethics that mathematical purity I'es. 

Thus then the ethical purity of Clark's functional group 
distribution appears to be a misapprehension, or a substi- 
tution. The cuckoo put into the nest turns the genuine prog- 
eny out. When one considers the real forces behind these 
Clarkian abstractions, the passion for life, the passion for 
power, the passion for wealth, one readily enough perceives 
that Clark's abstractions are not the motors in the evolution. 



CLARK'S PRODUCTIVITY THEORY 127 

One sees that the results manifested do not spring from the 
abstractions: rather the abstraction is a product, a shadow, 
an image. The ethical purity of functional group distribution 
is, as it were, an afterthought, a quality imputed to the results, 
just as " creation " is ** imputed " to capitalists. The real 
ethics lie in the actors or participants in the economic drama. 
Observation and history disclose the composition, tendencies, 
and relative power of these causes. 

Prof. Clark's functional group distribution is to avoid the 
" personal grievance " question. But as his groups after all 
are not independent somethings wholly superposed or im- 
posed on persons (groups are made up of persons), so his 
functional distribution does not escape the personal class 
distinction of possession. His theory of specific productivity 
becomes an '* imputed '' specific productivity theory. In 
" imputation " devices, you can not avoid knowing that some- 
where in the dim or misty background personal hands are 
pulling the strings. 

To this fictional ethical purity of Clark's functional distri- 
bution and to his representations in general there is a simple 
but very crushing answer. It is found in history. Slavery 
and serfdom have found defenses analogous to Clark's. Not 
to dwell on the cases of slavery and serfdom, turn to recent 
centuries. In the earlier part of the English Industrial Revo- 
lution and of the American Industrial Evolution, labor, cap- 
ital, competition, and self-interest were as nearly pure as could 
well be desired ; that is, unrestrained economic individualism 
had almost full sway. The result: — British life, national and 
individual, was being rapidly consumed to filthy ashes. Eng- 
lish factory legislation, even by the longer-headed exploiters, 
was the part answer. The course in the United States was 
not just the same. There age-long distinctions of classes did 
not exist. Population was not so dense. There was free 
land beyond the factory fence. This free land and the essen- 
tially democratic spirit it engendered relieved the United 
States of the English horrors. To-day the United States is 
often represented as the completest illustration of capitalistic 



128 ETHICS AND ECONOMICS 

development. The evolution has been much more nearly an 
economic one. The struggle has not been complicated with 
inherited class and religious enmities. But, to-day 1913, the 
dominant questions are labor legislation and the regulation 
of big businesses. The ethical paradise of Clarkian functional 
distribution culminates in a hell of unrestrained individualism, 
followed by regroupings of forces wherein the personal unit 
is more or less submerged in class or union contests. The 
Clarkian Utopia as tried out in history reaches purgatory in 
fact, because those abstractions of Clark, pure labor power, 
pure capital power and so on, are but fractional rarefactions 
of quite other concrete actors moved by more personal 
motives. The ethical purity of his functional distribution 
is a schematic dream. Other elements count for far 
more in producing divergence than his pages permit us to see. 
Economic history demonstrates the utter inadequacy of 
Clark's economic defense of bourgeois ethics. 

In line with the preceding is a delightfully sombre humor 
in Clark's treatment of that " glorious " risk-taker, the enter- 
prizer. Clark will have a law of distribution " desirable and 
morally justifiable," but to secure this, a world's desire, it is 
necessary that the heroic enterprizer expiate his existence 
by suicide; — by competition he gradually throttles himself 
into the land of shades. Now in our society of to-day the 
enterprizer has become an object of much animadversion. He 
is accused of all sorts of exploitation. One of the greatest 
of them, Carnegie, tells us that competition is dead, that com- 
binations dictate prices, and so on. Crimes innumerable are 
charged in general to the account of the enterprizer; the 
chorus is loud and from very unexpected quarters with accu- 
sations of extortion, stock-watering, money-mad pursuit of 
gain, and so on. All this evil, w^hether real or only fancied, 
Prof. Clark in his Utopia sponges off the slate by having his 
enterprizer suicide. Clark is to justify the present division 
into wages, interest, and profits ; — " distinct kinds of in- 
come," since each has a " diflFerent origin." Apparently, self- 



CLARK'S PRODUCTIVITY THEORY 129 

murder by the enterprizer cancels one-third of the problem; 
surely, an easy road to ethical purity. 

But how are we to transfer this phase of the Clarkian state 
to our own society? With us the enterprizer lives and 
flourishes greatly. Indeed laurels adorn his head plenteously. 
Where is his present ethically pure creative contribution, or 
imputed creation — he not yet having committed suicide? 
The astronomer finds the problem of three bodies too difficult 
for other than approximate solution. But then he comes to 
the three-bodies problem with a full solution of the two- 
bodies problem. Given the mass, direction, velocity, and so 
on of two physical bodies, and the astronomer will tell you 
exactly the path each body of the two will take. Add a third 
body, and with all the data determinate, the formidable en- 
ginery of mathematics will yet yield only an approximate 
statement of the path each of the bodies will pursue. Prof. 
Clark has his three-bodies problem of to-day, laborer, cap- 
italist, and enterprizer. He is to plot their course, economic 
and ethical. Fortunately for Prof. Clark, the enterprizer 
must die. The problem becomes that of only two bodies. 
Prof. Clark then sets out to demonstrate creationism. The 
solution in the end turns out to be only imputationism ; and 
even in this solution, the ghost of the enterprizer appears 
again and again upon the scene. Dead, his sins are wiped 
out. Only as a purified spirit perhaps does he reappear to 
give life and movement to Clark's abstractions. We could 
have wished that Prof. Clark had tried more fully his imputed 
creations upon this third body, and his efforts in the present 
life, particularly in connection with the specific productivity 
of labor and of capital. 

Or is it that Prof. Clark is after all not quite serene con- 
cerning the present-day functions of the capitalistic enter- 
prizer? In his Utopia, the enterprizer dying, some one else 
takes up the enterprizer's work — capitalist surely, not the 
empty-handed, empty-headed laborer. Is it that the capitalist 
shall not be a mere possessor, but shall do active social labor, 
or is it that the enterprizer is with us an interloper, a power- 



130 ETHICS AND ECONOMICS 

ful parasite sucking up spoil from both labor and from cap- 
ital? As you will. But somehow by this changing of func- 
tions, Prof. Clark has managed to wipe out in his Utopia a 
mass of questionable practices and relations current in our 
day. 

Prof. Clark's knightly, ethical enterprize has apparently 
something quixotic about it. Don Quixote in his tilting en- 
terprize undoubtedly saw something real. He was animated 
by ideas and emotions quite as noble as Prof. Clark's. Con- 
siderations from other view-points resolved Quixote's illusion, 
Consideration of Prof. Clark's enterprize seems to result in 
a similar disillusionment. When one tests the matter accord- 
ing to the criterion apparently wholly approved by him, one 
meets something very much like contradictions. Though 
seeking to escape from " pure ethics " into economics, Prof. 
Clark admits into his " economic causation " a permanently 
biasing factor. Interest as such is the evidence. Descend- 
ing from his rarefied abstractions one finds the force con- 
cealed in the biasing factor more or less ruthlessly at work in 
concrete relations. Slavery, serfdom, industrial and com- 
mercial exploitation in all ages, is the proof. Insurrections, 
revolts, strikes, labor legislation, is the corresponding re- 
sponse. 

CLARK'S ETHICS ARE RELATIVE AND TRANSITORY 

No doubt Clark's defense of capitalism invokes an ethical 
system. We now see that it is imputational ethics. The 
test which he advances, workers satisfy directly; capitalists 
satisfy it by imputation, the power of their machines is im- 
puted to them. Ancient indeed and far-reaching is the doc- 
trine of imputation, not merely for this life, but also for the 
life to come. All virtue is attributed to the ruler, his vices 
to his agents or ministers. Membership in a caste, in a class, 
possession of certain blood descent, each confers by impu- 
tation privileges, powers, virtues, or their contraries. We 
even reach heaven at last according to some by the same de- 
vice. To-day the instruments of production having become 



CLARK'S PRODUCTIVITY THEORY 131 

so tremendously complex, a modern " pure science " problem 
arises in order to apply with perhaps greater subtlety the 
imputation doctrine. Look away from or below the stately 
columns of these structures, and see as their foundations 
concrete modes of social organization for the production and 
distribution of economic goods. Every thing turns upon this 
fact. Taken typically, each case presupposes a material en- 
vironment, a technique of production, a population, a psychol- 
ogy, and an ethics, all consonant with one another. Re- 
garded concretely, one sees human beings of varying qualities 
in certain material surroundings, battling individually and in 
groups to maintain life by the creation, distribution, and 
consumption of economic goods. Prof. Clark's case is 
merely one of these possibilities. 

Clark's ethics are therefore only relative ethics; they de- 
pend upon and express social forces. These forces and their 
resulting ethics are perfectly " natural " but they are also 
special to a particular social combination. Given a different 
social combination, and different but equally " natural " laws 
of distribution will result with a consequent different ethics. 
Prof. Clark knows better than most of us that economic 
systems have differed widely in the past, and that the ethics 
of these different economies were quite dissimilar. The 
ethics of a slave economy, of a serf economy, the laws of dis- 
tribution in household economy, and in town economy, were 
just as " natural " as are bourgeois ethics and imputation dis- 
tribution in an exchange economy. Why then should Prof. 
Clark obscure the matter by a slight reference to " pure 
ethics," and then adventure on his subordinate ethical enter- 
prize? Is it that he himself is ethically confused, or is it 
that he has so concentratedly viewed his economic problem 
as not to feel the wider relations between ethics and eco- 
nomics? Seemingly he does not admit in this matter, that 
however " natural " and indeed however justifiable, imputa- 
tion ethics may be in certain social and economic relations, 
other ethical concepts are just as " natural " and inevitable 
under changing social and economic conditions. Failure to 



132 ETHICS AND ECONOMICS 

keep in mind this relativity of ethics leads to those rigid 
representations which only intensify social passions arising 
from conflicting interests born from changing conditions. 
Hence the passionate combats, and the confounding of dif- 
ferent ethical ideas, creational and imputational among the 
rest. 

Prof. Clark's abstractions express the soul of bourgeois 
ethics. In his airy realm all seems serene and pure. If only 
the real world corresponded with accuracy. But the two 
worlds are not quite alike. Not one of Clark's pure abstrac- 
tions but departs widely from reality. Hence the Clarkian 
schema is only a fractional aspect. An attempt to push the 
schema throughout social relations reveals its onesidedness, 
and also the onesidedness of the derivative ethics. For after 
all, this abstract fragment of actual life is but the idealized 
reflex of the dominant powers. The feelings of approbation 
attending the parts constitute the ethical garb. Those feel- 
ings express and reflect the desires and purposes of the holders 
of power. The vast, intricate, and changeable system of 
private property with all its derivatives is the sufficient proof. 
This system expresses, (a) the real indispensability of eco- 
nomic goods to human welfare, physical and cultural ; (b) the 
special views of the ruling class concerning this necessary re- 
lation. The dependence expressed in (a) penetrates every 
phase of human activity, scientific, aesthetic, practical. 
Sentiments of social welfare approbation attach themselves to 
aspects of these various phases. These sentiments if mass 
resultants constitute ethics. As mass resultants they express 
power. Within our society the chasm between the possessors 
and the dispossessed demonstrates the place of power. The 
history of all societies wherein private property, especially in 
productive fields, has held full sway shows that the holders 
constitute a small class. The direct power of this small class 
was reinforced by the much vaster power of the rest of 
society; economic dependence generates psychological de- 
pendence, which in turn maintains and tends to perpetuate 
the economic dependence ; witnesses, — slavery, serfdom, caste 



CLARK'S PRODUCTIVITY THEORY 133 

systems, and even the deification of the emperor belatedly 
lingering among the Japanese to-day. Hence the ethical 
sentiments which Prof. Clark would instill into us from his 
economics of private property in all productive instruments, 
represents only a limited class ethics, bourgeois ethics. His 
refusal to discuss " pure ethics " merely indicates that he re- 
fuses to go outside of his private property schema; he will 
remain bourgeois. 

Exterior real forces mold a social situation ; this is true of 
even a dependent psychology. Since individualism is now 
giving way to unionism, competition to combination, simple 
hand tools to huge complex machines, primitive means and 
methods of communication to gigantic transportation, tele- 
graph, and telephone systems, isolated self-maintenance to 
completely socialized production and dependence, simple un- 
educated labor to a necessarily highly trained labor, ignorant 
superstition tremblingly supplicating fantastic and unknown 
gods to calm clear-eyed science that tries out with law-born 
impartiality the old and the new, what wonder if in actual 
life another ethics should seek to jostle the old ethics from 
oflF the field. 

The foregoing discussion should afford at least the dawning 
of the perception that ethical ideas and ethical passions are 
wholly relative and of experimental origin. The bourgeois 
sees a heaven of rest and peace in his property-born impu- 
tationism. He regards a socialistic idealist as something akin 
to a madman, an ignoramus, a criminal, an adorer of unlimited 
" pig's-wash." The socialistic idealist, even of the Marxian 
stamp, is apt to read into the ordinary bourgeois, narrowness, 
conscious and intentional hypocrisy, greed, cunning, violence, 
and all other vices which human nature is capable of. But 
an intelligent glance at history, especially in its sociological 
and institutional aspects, shows easily how diverse ethical 
codes are, and how surely for the mass these codes run into 
schematic forms which take on aspects of finality for those 
pledged by the accident of birth to a maintenance of life and 
social position under them. Imputation flourishes as a 



134 ETHICS AND ECONOMICS 

schematism, because the interests and passions of the preent 
holders of economic power demand imputationism as the 
psychology consonant with the maintenance of their position 
of advantage. Creationism is a flourishing schematism, be- 
cause this concept answers better to the demands of the 
workers. Divine rights and theological postulates are schem- 
ata, just as arc purity of birth, or caste systems. For exactly 
similar reasons, slavery and serfdom find like schematic ex- 
pressions. An examination of history shows ethics to change 
with the changes of the conditions of life-maintenance. Even 
to-day one finds ethical concepts differing for different social 
strata. But the conditions of life-maintenance are inevitably 
the fundaments of social and individual existence. Ethics are 
only an expression of these conditions and relations. 

It follows then, tentatively at least, that the mode of con- 
sciousness called ethical is in great mass economic in or'gin 
or reference. " For nothing does the state exist if not to 
protect property." If then the huge modern state have no 
other, or at least no stronger, warrant for its existence than 
to protect property, one can see at a broad glance how deeply 
penetrating and all embracing this economic ethical con- 
sciousness must be. The immense power of this general 
social consciousness, envisaged in each individual as personal 
bourgeois ethics, to mold the coming generation is also man- 
ifest at inspection. Always the economic determinative gets 
itself expressed in various abstract schematic phrasings deal- 
ing with humanity as such, — " use no man as a means, only 
as an end in himself," or with abstract, absolute, eternal, in- 
defeasible rights, and so on. Thus a dominant ethical creed 
appears to stand wholly on its own feet independent of eco- 
nomic or other relations. It claims the right and the power 
to dictate terms to society as a whole. Presented thus to 
each newcomer into its world, it takes on for him the aspect 
of " an ordinance of nature, a decree of fate." A resolute 
scrutiny of its claims in the light of history and of compar- 
ative ethics makes tatters of this claim of finality. Such a 
scrutiny exposes to the clear, cold light of reason the ultimate 



CLARK'S PRODUCTIVITY THEORY 135 

principle of all ethical relations, the changing- welfare of 
society, and through society the welfare of the individual. 

Bourgeois ethics in no wise escape this principle. They 
are in no wise a product springing from developmental pro- 
cesses immanent in pure reason as such. On the contrary 
the schematic form given to ethical concepts varies with the 
changing outer and inner forces determining concrete ob- 
jective relations. Capitalistic ethics are a historic evolution. 
But since neither history, nor evolution, however personified, 
represents a separate independent power, but each is rather 
an abstract general expression for the passionate reasoning 
men and women who amid external circumstances live and 
make history and evolution, so these same concrete forces can 
in the future swing together into a different alignment, — in 
which case bourgeois or cap talistic ethics must take the road 
of all things human; they must march to the grave. It can 
only be hoped, not guaranteed, that the efflorescence which 
shall take possession of the vacated space will have its roots 
in a finer human soil. 



CHAPTER IV 

AUSTRIAN- YALE THEORY OF INTEREST 

Economics and Ethics; Chaeity; Interest, Old and New; Boehm- 
Bawekk and Fishee; Ethical Undbkcurrents; Maexians. — Thb 
Interest Question Accurately. — Bobhm-Bawerk's Theory and 
Reasons: Undeebstimate of Value of Futuee; Peovision fob 
Future; Technical Superiority of Present Goods; Fisher's Addi- 
tions. — Discussion: I. "Necessities" Confused: Unchangbablk 
AND Changeable "Necessities "; Changeable Elements Are Activb 
Causes; Time, not Specific Cause; Psychological " Necessity," 
General, Austrian; Interest, a Social Product; Interaction of 
Nature and Man; Specific Cause of Interest Is the Mobile Ele- 
ment. II. Boehm-Bawerk's Reasons Are Products op Present 
Institutions: Underestimate and Present Provision; Wages and 
Wage-Classes in United States; Contrasts; Absence of Security; 
Weakness of Majority Inceeased; Slave Psychology; Technical 
Superiority of Present Goods; Effect on Psychology of Holdee8 
AND Children; Habit; Love op Offspring; Austrian Interest 
Largely Circular. — III. History: Loan Interest.— IV. Cause op 
Interest: Production Process, Labor, and Costs; Interest Rate 
AND Profit Rate; " Pure" Time-Preference Omits Social Causes 
AND Is a Product; Fisher on "Slowness of Mature" and "Impa- 
tience OF Man "; Fisher on " Exploitation "; Social Control of 
Time-Preferences; Time-Peefeeence Is Resultant of Outbk 
Forces; Real Cause of Interest Is Gain; Time Is Formal Cause. 
V. Ethics of Case: Boehm-Bawerk's Position; "Intuition" Un- 
workable; Ethics Change with Change op Seat op Power. 

The intimacy of the connection of ethics with economics 
becomes more and more interesting, the more carefully the 
relationship is studied. This connection, our professional 
ethical teachers seem not to have noticed with sufficient care 
and fullness. Their neglect, much more explicable on eco- 
nomic than on ethical grounds, is itself an additional illus- 
tration of the fundamental principle of economic determin- 
ism. Further illustrations are found by considering the 

136 



AUSTRIAN-YALE INTEREST 137 

varying fortunes of the different virtues in connection with 
their economic substructures; charity for instance or the care 
of the poor. In the day of the gentile or kinship organization 
of society there were no poor in our sense of the term, that 
is, persons without means who by law and public opinion must 
depend upon themselves alone for maintenance ; mutual aid, 
clan support, was a thing of course. Similarly in the patri- 
archal family, in the larger household economies of former 
days, in the civil support and distribution of grain in ancient 
cities, especially in Rome. Then in western civilization came 
the gradual assumption by the church of the care of the poor; 
the change in the churchly care as the economic status of the 
church varied; the further changes due to the breakdown of 
feudal and clerical administration; then the entrance of the 
civil power with its poor-law regulations; the extension of a 
long-headed economy of prevention over against transient 
relief; and finally the cutting criticism of existing society by 
socialistic and non-socialistic reformers; all these changes in 
ethics marking the steps of changing economics, furnish 
matter for seriously interesting thought. 

Interest-giving and interest-taking is another such problem 
in ethics and economics. The question has been a subject of 
bitter discussion for centuries. Not a few writers desire and 
endeavor to find modern economics fundamentally free of all 
ethical taint. This taint seems very noticeable in the im- 
mediate neighborhood of interest-taking. Accordingly the line 
of interest defenders appears to stretch out interminably. The 
entire tribe of economists professional and official find the 
interest problem an ever-stimulating question. To-day in- 
terest-getting is a world-wide phenomenon, and it has in 
some forms paced this earth these thousands of years. If 
it be no easy task to write an indictment against an entire 
nation or people, it would seem not less dangerous to write 
an indictment against a phenomenon which was Babylonian 
with the Babylonians, Greek with the Greeks, Roman with 
the Romans, which is English with the English, Jewish with 
the Jews, Japanese with the Japanese. So universal a phe- 



138 ETHICS AND ECONOMICS 

nomenon, a stranger to no great historic people or epoch, 
must seemingly have roots striking deeper and deeper into 
elemental soil. Hence the attempt again and again to explain 
and to justify the taking of interest. Accordingly the ex- 
plainers have given to us a " round dozen " of theories, with 
of course eclectics of every shade and variety. There is at- 
tack, then counter attack, distinctions and casuistry in great 
abundance. Still the debate goes on. It goes on, because 
the phenomenon itself and certain unhappy results reputed 
to be indissolubly connected with interest-taking are always 
before us. Hence theory has as it were to systematize, ex- 
plain and justify, or to systematize, explain and condemn 
a phenomenon well-nigh universal, at least in all lands classed 
as the most advanced of the present world. 

Perhaps the most distinctive of the recent presentations of 
this problem is the psychological explanation of the marginal 
utility school of theorists. Although not earlier in the field 
than the English Jevons, the Austrians appear to have pur- 
sued the matter from this side with so much diligence that 
the theory is properly enough called the Austrian theory. It 
it represented typically by Prof. Boehm-Bawerk, who de- 
velops his solution of the interest problem specifically in 
his two volumes, " Capital and Interest " and " The Positive 
Theory of Capital." Since the views of this Austrian school 
appear to gain wider and wider currency, it seems not out of 
place for present purposes to look somewhat critically into 
this explanation and defense of interest. 

The older economists had of course their theories of in- 
terest. They regarded matters more perhaps from the ob- 
jective side. They took men's wants and desires as more or 
less granted, fixed, or understood. Their questions were as 
to the external objective arrangements, forces, or causes 
which interacting brought about the production and 
distribution of wealth or economic goods. The newer eco- 
nomics is a product of dissatisfactions with the older classic 
schools. The old views appear to have led into so many 
blind alleys, to have run into so many confusions and circles, 



AUSTRIAN-YALE INTEREST 139 

and they became so much a prey to socialistic criticism that a 
newer basis had to be found, if the socialistic attack of Rod- 
bertus, Marx, and others was to be adequately met. From 
1600 A. D. onward, the conflict between the remains of feud- 
alism and the rising commercial industrialism, the immense 
advance in productive machinery and the means of communi- 
cation, the vast increase of population, the breaking down of 
traditional habits, instruments, and processes, — all these and 
other elements forced to the front an individualistic attitude. 
All society was being turned into one vast market for ex- 
changes, and in this market actual exchanges for the most 
part took place seemingly between individuals. Hence the 
psychological plunge of the "Austrian " or the final or mar- 
ginal utility school. From being objective, economics appears 
to have become more subjective or psychological in its ex- 
planations. In a way then the Austrian doctrine is much 
more subtle than its predecessors. The explanation and de- 
fense of interest from this view-point is apt to gain a seem- 
ing universality and completeness quite captivating, if not 
ensnaring. The appeal to common human nature and ex- 
perience, if neatly phrased, finds a ready echo in every per- 
son's mind, because in fact that person is himself a product 
psychologically of the very forces and institutions which are 
under discussion. Hence the subtlety of any errors and the 
difficulty of displacing them from the mind of the casual 
thinker. 

Prof. Boehm-Bawerk has put immense and acute labor upon 
the problem, and has summed up his studies in the two books 
mentioned. Prof. Fisher of Yale College in his " Rate of In- 
terest " has recast in some respects the theory, has rectified 
Boehm-Bawerk's misinterpretation of one of the main prin- 
ciples, and has in general presented the matter in so masterly 
a fashion as to give to it within his chosen limits a relatively 
final form. So finished a product is of great use both to 
those who accept and to those who reject the marginal utility 
doctrine. We shall accordingly deal with Boehm-Bawerk's 
and Fisher's representations of this psychological school. 



140 ETHICS AND ECONOMICS 

In the 426 pages of " Capital and Interest " Boehm-Bawerk 
reviews the history of interest theories, states, criticizes, and 
rejects all former solutions of the interest problem. The 
gist of the entire book is : — former theorists have either not 
seen the problem clearly, and thus could not give an adequate 
solution, or having finally come to see the problem clearly, 
their solutions in eftect beg the question. His second book, 
" The Positive Theory of Capital," contains a statement of 
his own view and an elaborate explanation and defense of 
it along the whole line. Prof. Fisher accepts as solid Boehm- 
Bawerk's position, he rejects as non-significant one of Boehm- 
Bawerk's pillars, adds a supplementary item or two, gives 
the whole a mathematical dress, and furnishes a complete 
solution of the problem so conceived. Prof. Fisher appears 
to have done his work beautifully. He has schematized cer- 
tain social relations under mathematical forms, and within his 
presuppositions has dealt with these forms, seemingly, with 
mathematical finality. But however adequate his work under 
his presuppositions, it may be a far cry from his schematic 
version to the general social problem involved in interest- 
giving and interest-taking. 

In most if not all interest explanations, a powerful under- 
current makes itself felt. On the one hand, interest-getters 
and their defenders would have it appear that interest is as 
inevitable as gravitation or death. They tell us, it has ex- 
isted, it does exist, and will continue to exist, be the social 
constitution what it may. Being thus inevitable, it must be 
proper and just; there can be no exploitation about it, it is an 
equitable demand, a righteous requirement, it can not be 
avoided or overthrown, and therefore any attempts along that 
line are illusory, Utopian, contrary to the fundamental laws 
of human nature and of human society. On the other 
hand, the socialistic criticism by Rodbertus, Marx, and others 
made such inroads upon former naturalistic interpretations 
of interest-getting as to shake greatly the old structures. 
These critics find interest common indeed, almost universal 
in fact, and yet with all that they find it essentially unjust, 



AUSTRIAN-YALE INTEREST 141 

unrighteous, that is, a wholesale exploitation of the weak by 
the strong. 

It matters not at this moment for present purposes whether 
the socialistic attack is founded upon so-called pure ethics or 
upon economic necessity. A Marxian for example can readily 
explain on economic grounds why interest-taking must under 
certain conditions arise. He can accept its relative ethical 
validity and can go on then to explain his demand for and his 
expectation of its extinction. In other words the Marxian can 
largely accept the general doctrine of the so-called natural- 
istic defense of interest and yet refuse the aspect of finality, 
and the consequent ethical purity, such as many of the or- 
thodox economists appear to predicate of it. On the other 
hand, abstract ethical and social reformers find their criticism 
greatly blunted, where interest is represented as an inevitable 
product of " natural necessity." If interest-getting can be 
grounded on psychological and objective facts which stand 
outside of any and all possible or conceivable social arrange- 
ments, then idealistic or Utopian ethics must largely regard 
the matter as for instance it regards the law of gravitation, 
namely, interest per se lies wholly outside the scope of ethical 
discussion. The Marxian however is not so straightened in 
this matter. His entire doctrine compels him to find that the 
significance of even these so-called ethical and psychological 
" natural necessities " is a nullity outside of their social and 
economic actions and reactions. The Marxian is therefore 
bound to examine with quite critical eye these " natural neces- 
sities " invoked. Just as the " social contract " man, the 
" economic " man, the angelic or " pure reason " man of a 
Kant, have been found to be abstractions which in effect 
tacitly beg many of the matters in dispute, so it may be found 
that this latest psychological product again presents a like 
round of subtle petitios. At all events the present purpose is 
to examine this claim of interest-getting as grounded upon 
natural and psychological necessities, and thus to pave the 
way for a clearer appreciation of the so-called ethical purity 
of interest. If the significance of interest-getting be found 



142 ETHICS AND ECONOMICS 

to rest wholly or even largely upon human social institutions, 
the rterve of this thousand times repeated ethical defense of 
interest as a finality of " natural necessity " is cut. One ob- 
stacle to reform ideas is thereby removed. 

THE INTEREST QUESTION 

First then the interest question itself more fully and more 
accurately. Now it is a commonplace of everyday knowledge 
that the European nobility, their kings, lords and ladies, 
our millionaires, bankers, and capitalists in general reap a 
great harvest of wealth. Thousands of them actually have 
no other business in life than to spend their constant inflow. 
There are literally thousands and thousands of persons who 
live and that too most handsomely upon the interest of their 
investments. Thousands and thousands of others labor, 
scheme, administrate with tremendous and terrible earnestness, 
and as a result pile up thousands and even millions of dollars. 
Our Carnegies and our Rockefellers reap huge profits. ThDU- 
sands and again thousands undertake the same feat and are 
crushed in the attempt. Millions and millions labor from the 
dawn of youth to an early broken manhood or to a late dis- 
integrated old age with never a momentary vision of such 
a personal possibility. The vast majority labor forever; 
some, relatively few in numbers, live on the interest of their 
possessions. 

Now the question is: — Whence this interest on capital as 
such? Whence the possibility of a man living, and that too 
very handsomely, without ever doing a single stroke of work? 
That he lives from the interest of his capital investments is 
plain enough. But what is the explanation of the origin of 
this interest? This interest is net interest. The profit of the 
enterprizers, of the Carnegies, of the Harrimans, in the days 
of their active service, might readily enough be granted to. 
arise from the exercise of remarkable powers or from the 
using up of remarkable chances. Their rewards might be 
regarded at least as a just return for their extraordinary 
abilities. But how comes it that after they have ceased from 



AUSTRIAN-YALE INTEREST 143 

their active labors, their capital can go on bringing in to them 
a yearly return, so many per cent of their total investment? 
The laborer you plainly see at v^rork upon a serviceable article, 
a pair of gloves, a plough, a w^agon, or upon something that 
you positively know to be useful. The superintendent, the 
manager, and the boss you can plainly see to be doing neces- 
sary w^ork in directing, managing, conjoining the separate 
individual efforts of the hand-v\irorkers. You can easily see 
a Harriman evolving, as does an inventor, a new combination 
more effective than any former one for doing a certain work 
profitably. All these receive an economic reward, much of 
which you may be quite ready to pass by at first as more or 
less faultlessly earned and paid for. But these interest-get- 
ters, whose pleasant privilege it is to clip coupons, what do 
they do in the acts of economic production? 

BOEHM-BAWEKK'S THEORY OF INTEREST AND REASONS 

The older economists, says Boehm-Bawerk, did not clearly 
see this problem of net interest as such. They confused the 
matter more or less with wages of superintendence, with in- 
surance against risk, with sinking funds, with profits in gen- 
eral, and thus their explanations from natural vital fertility, 
from abstinence, from capital productivity, from labor dis- 
placed or accumulated, from uses of goods, from exploitation, 
— all missed the mark. Each caught up some aspect or phase 
of the question, but each failed to find the specific cause of 
the net interest. This specific cause of net interest Boehm- 
Bawerk finds in the human psychology of time relations. In- 
terest arises from discounting the future. A person's esti- 
mate of the subjective value, the desirableness or probable 
usefulness to him of a future good is necessarily less than his 
estimate of the subjective value of an exactly similar good to 
be had at the present time ; or more tersely — " future goods 
are less valuable than present goods of exactly the same 
amount and kind." This subjective difference causes various 
persons in actual external relations to exchange or to promise 
for present goods a greater amount of future goods. The dif- 



144 ETHICS AND ECONOMICS 

ference of these two amounts is net interest. Looked at from 
the present, the larger quantity includes the present worth 
plus net interest. Looked at from the future, the smaller 
amount is the discounted value of the larger. Interest thus 
registers and measures the influence of time upon valuations. 
Now no form of society can escape such differences in time 
valuations. Hence interest is one of these natural necessities 
against which it is useless to declaim and vain to contend. 
Our author details three reasons, that is, three large groups 
of facts, which make for his contention. 

Underestimate the Value of the Future 

As a fact of mere psychology we habitually attach less im- 
portance to future pleasures and pains and hence to the cor- 
responding goods, simply because they are future. This at- 
titude children illustrate up to a rather late age ; motor im- 
pulses fill their lives; their day is crowded with sensation and 
action ; a year is an infinity of time. Savages the world over 
and of course throughout all past ages seem to take scarcely 
any thought for the morrow. Economic calculation on their 
part is almost without exception purely non-existent. Besides 
these persons, thoughtless workers abound. We ourselves 
in eating, drinking, putting off till to-morrow, yielding to the 
influence of the present hour and present companions, to un- 
thinking generosity, all manifest the same lack of regard for 
anything but present feelings and impulses. 

We lack mental strength in this direction. Either we do 
not remember distinctly and acutely our past pleasures and 
pains in connection with some good, or we do not possess a 
vigorous enough imagination or pictorial power to produce a 
lively realistic image of our future wants, pleasures, and pains. 
Often enough the sensations and the emotions of the present 
hour are so engrossing as to leave us no power at the moment 
to picture a future good. So that if such a good were offered 
to us under certain conditions, we might decline to give to it 
even a momentary consideration; or as implied above, even 
in calm reflection whether idle or earnest, our representative 



AUSTRIAN-YALE INTEREST 145 

power might produce only a weak or faint image of the future 
use. 

Or the weakness might attach to our wills. We might 
have a lively enough sense of the future, but as with many a 
" good fellow " we might not be able to stick to our judg- 
ments or resolutions concerning foreseen consequences. The 
impulse of vanity in the presence of others, living up to their 
expectations, imitation, going with the crowd, mob spirit, or 
class spirit, all these may tipset our coolest decisions, just as 
the sight of liquor, its odor, or the chance to secure it over- 
turns many a drinker's wisest resolve. Thus from weakness of 
will and of imagination many of us habitually underestimate 
the value of future goods. 

The shortness and the uncertainty of all human life work to 
the same end. This uncertainty so far as it is objective, that 
is, pertaining to external wants or objects, does not concern 
us here. That may be handled by the doctrine of probability 
or the theory of chances ; it can be evaluated, and so far be 
reduced to certainty. It is the subjective, the mental incer- 
titude, which is here referr-id to, t'^e attitude of the mind itself. 
As regards personal consumption goods, no man would esti- 
mate a consumption good of any value at all to him, if that or 
a like good were to accrue to him only after the lapse of 150 
years. The rarest, the daintiest, the divinest possibility on 
such terms would not be worth to him for personal consump- 
tion the meanest and tawdriest utility of the present hour. A 
Methuselah might naturally hesitate to reject such a pos- 
sibility ; a Methuselah or some other of the old patriarchs, but 
hardly any twentieth century man. Nor if you diminish the 
interval to 100 years, or to 50 years, would there be any con- 
siderable variation as to the valuation of a personal consump- 
tion good. As you shorten the interval, the valuation rises 
higher and higher until there is at last but little or no dif- 
ference between the valuations of present goods and those of 
the immediate future. The falling away in valuation is of 
course most marked in regard to personal consumption goods. 
But even of more permanent goods, lands, houses, or that 



146 ETHICS AND ECONOMICS 

succulent essence of all material goods, money, a like dim- 
inution is observable. The future is the great unknown. 
Innumerable chances and mischances lie behind the veil. The 
uncertainty of health, strength, and life itself, the entrance of 
organic bodily and mental developments w^hich may change 
all possible valuations of goods whether transient or per- 
manent — all these make themselves felt. As a boy a rattle, a 
fife, or a drum sufficed ; as man you put away childish things ; 
as expanding man you expect organic or mental changes to 
nullify present estimates ; as aging man the whole world with 
all its values may fade away into nothingness, economic goods 
most of all. Be the objective causes or the internal reasons 
what they may, we are certain only of the immediate present, 
we are ignorant of the future. This relation is reflected in 
different degrees of intensity in the psychology of every per- 
son. Hence as a rule the present is more valuable to any man 
than is the future. 
Provisio7is for the Future 

It is evident that we really live only in the present. We 
may dream of the past or of the future, but we reach the 
future only through the gateway of the present. Accordingly 
present wants are paramount. Food in abundance in one 
year and no actual food till then, means for all of us no food 
even then, since we should then be dead. A future overcoat 
is no protection against the present storm of wind, snow, and 
sleet. A palace in ten years does not shed tempests of rain 
or hail in the present. Lucullus feasts in imperial purple in 
a golden house of a Caesar in ten years will stay no present 
pangs of hunger, thirst, or love. A Juliet might in wish split 
sun and moon into jewels to hang on Romeo's neck, but it 
is the living Romeo she wants in the present moment, whether 
he have sun-bursts on him or not. 

In general, present wants must have present supplies. Now 
the enormous multitude of mankind are but scantily supplied 
indeed for meeting wants even in a brief present, to say 
nothing of a rather long future. Relatively few are amply 
provided against the future. Even these have to exercise 



AUSTRIAN-YALE INTEREST 147 

care, or by a too injudicious overvaluing of the present or 
undervaluing of the future, they also quickly join the great 
numbers who have little or no provisions against the coming 
storms. Hence for legions, " imperious care," or his fellow, 
careless improvidence, ever sinks future values lower and 
lower, or heightens present values to be the sole object of 
momentary consideration and regard. 

To this great throng of the permanently poor is to be added 
the not uninfluential number of those who under the lash of 
invidious emulation are seeking improved future circum- 
stances. The young, looking for development, hoping for 
a better day, spend borrowed amounts to be repaid with in- 
crease, when a positon or professional status is achieved. 
The rising lawyer, or doctor, or aspirant for influential station 
in any line, he, or his family, or his friends pay out large sums 
to be repaid with increase when success is gained. All these 
supply present needs at the expense of the future. Likewise 
our national governments, our states, counties, and cities 
saddle upon the future the payment for wars, Panama canals, 
and various other purposes and improvements. Thus again 
the mass average of this practice causes the present to over- 
top the future. 
Technical Superiority of Present Goods 

Boehm-Bawerk puts much labor and weight upon this third 
support. He elaborates a number of mathematical tables, 
and insists that his structure stands or falls with this par- 
ticular prop. Prof. Fisher successfully shows that Boehm- 
Bawerk is under an illusion here. Though not the key-prop 
as Boehm-Bawerk thought, it does add an element of strength. 
It is of course evident that future goods can not satisfy 
present consumption wants or present production purposes. 
It takes time to produce anything. When the means and 
instruments of production are at hand, production may begin 
at once. The desired result may be had earlier than if the 
means had first to be made and assembled. Often enough 
a chance combination of circumstances, a favorable oppor- 
tunity, might be richly productive if only one had the requisite 



148 ETHICS AND ECONOMICS 

means on the spot. Always present goods may be devoted 
to immediate consumption, to immediate production for the 
future, or to the seizure of the flying- chance, — as by buying 
up bankrupts' stores, or as brokers by making money at both 
ends of a financial squeeze. Future goods can not be devoted 
to present consumption, to the immediate furtherance of 
future production On both counts present goods are to be 
preferred to an equal amount of like goods in the future. 

Precisely on the above ground Boehm-Bawerk casuistically 
adds another moment to the forces leading to the underesti- 
mate of the future Since the vast majority of the poor are 
so scantily provided for, one would think that an abundance 
of possessions would surely lessen the general underestimate, 
and especially that of those having an abundant stock. So 
too it does from the mere consumption side. But when you 
add the possibility of future gains, you readily see how Boehm- 
Bawerk turns the power of riches into a reason why the 
wealthy also add their underestimate to that of the poor. 
Their possessions enable them to seize for themselves the fly- 
ing opportunity with all its possibilities of gain. On one side 
they stand to pay larger amounts of future goods than the 
average, because on the other side they expect to reap still 
larger profits. How different then is the psychology of the 
poor from that of the rich. Scanty supplies, weakness, fear, 
against full stores, strength, and hope of gain. These classes 
are poles asunder in their attitudes. The one in effect con- 
sents from necessity to be exploited ; the other hopes from 
mstitutional arrangements to be able to profit from the weak- 
ness of others, that is, hopes (however unconsciously) to be 
able to exploit. 

Prof. Fisher adds to the above some further considerations 
as having influence upon a person's time-preferences. Habit is 
one of them. What one has been accustomed to powerfully 
affects his valuations of the present and of the future. No 
one can easily shake oflt" long-established habits of thinking 
and feeling. The rich man's son will think and feel differently 
from the poor man's concerning present values. On the 



AUSTRIAN-YALE INTEREST 149 

whole we may say in effect with Fisher that the poor, the 
spendthrift, and the prodigal rich will overestimate the pres- 
ent, while the saving poor and the reasonably careful rich will 
not unduly underestimate the future. Another element men- 
tioned by Fisher but implicitly included in the above state- 
ment is care for the welfare of offspring. This leads to that 
saving and expenditure for the benefit of children as is repre- 
sented in advances, for the help of the rising lawyer, doctor, or 
other aspirant. Fisher further discusses the influence of cer- 
tain elements of man's income as determining his valuation of 
time, the size of the income, its regularity or evenness, its 
composition, its probability; but these points are implicitly 
contained in Boehm-Bawerk's presentation. Still another and 
wholly non-social element of interest he suggests, namely, the 
cycle character of nature phenomena : — the seasonal output 
of wheat, or cereals in general; the time element in animal 
fruitfulness ; the migrations of fish, fowl, and game animals; 
seasonal variation in water supply ; transportation possibilities 
and so on. In any continuous economy account must be taken 
of these natural facts. The wheat supply must be stored for 
future use. These periodic recurrences of abundance and 
dearth (if no storage takes place) must lead even- 
tually to a perception of the difference between 
present and future values. This difference, says Boehm- 
Bawerk and Fisher, is in effect nothing but the phenomenon 
of interest-getting. 

Thus it seems that future goods have less subjective value 
than have present goods. Now, continues Boehm-Bawerk, 
these subjective valuations of various persons clash. Ob- 
jective exchanges can therefore take place. The ratio of ex- 
change between present and future goods is determined by 
the relative strengths of these subjective valuations. But 
since the overwhelming majority of exchangers are compelled 
to regard the present as more important than the future, it 
follows that objective exchange ratios will always show 
future goods as less valuable than present goods. Interest 
registers and measures this difference in the valuation of the 



150 ETHICS AND ECONOMICS 

present over the future. Interest is simply this difference 
realizing itself in actual life. 

The above are the essential grounds of Boehm-Bawerk's and 
Fisher's representation of interest-getting as a " natural 
necessity," as a something quite independent of social institu- 
tions, against which it is useless to complain and vain to con- 
tend, and hence that it is ethically sound and pure at the core. 
Now it is certainly not our purpose to gloss over any facts 
of nature. We have no. desire to tilt against wind mills. We 
shall not deny that there is a difference of some sort between 
the present and the future. We shall admit the cyclic char- 
acter of many natural phenomena, cereal harvests, animal 
f ruitfulness, migration of game ; we shall admit differing intel- 
lectual, emotional, and volitional characteristics in man ; hence 
differences in efhciency. But we shall insist that this general 
argument must stand as other arguments in economics, the 
conclusion must follow preponderating forces. For example, 
current economics presuppose that each man pursues his plain 
economic interest. This assumption is false in millions of 
cases. But with all that, economic science and economic facts 
remain true in general to the presupposition. So in this case. 
We shall seek to indicate, (a) that this marginal utility school 
misconstrues some of its natural necessities, (b) that its 
psychology is in a sense largely superficial, and hence the 
conclusion founded on this base is largely a circular petitio, 
(c) that it is historically false, and (d) that hence the ethical 
status of interest is quite misconceived. 

"NATURAL NECESSITIES" CONFUSED 

As to the first point, these " natural necessities." We have 
already seen something of these necessities in the preceding 
article, but it is worth while to look a little more closely at 
them and their interrelations. The appeal to " natural neces- 
sities," so seductive and effectual to the casual reader, is 
apt to jar on the critical thinker. It belongs to the same class 
as appeals to " intuition," to " self-evident " truths, to patriot- 
ism, to the tenets of this or that group to which one belongs. 



AUSTRIAN-YALE INTEREST 151 

What one desires, what one is familiar with, appears to a 
person so " natural " that only with great difficulty does he 
believe that others can really think or feel dififerently. But 
the number of ideas, beliefs, feelings, and practices which 
have been branded as " intuitive," " natural," and so on, is so 
great, and the ideas themselves are so variegated, that one 
more or less familiar with the motley company will look 
askance at any new aspirants in this line. So many swans 
have turned out to be only geese after all. This confusion is 
particularly apt to occur in dealing with social and psycho- 
logical interrelations in connection with objective " natural 
necessities." A dependence of mind and of society upon 
natural laws is so manifest, that loose or artful handling of 
the relation can easily lead to mental confusion. Or a de- 
pendence specialized in its expression by reason of institu- 
tions growing out of it may have peculiar and necessary 
consequences. The necessity in this latter relation may be 
treated as if it were of the same primary class as the neces- 
sities of objective nature. Or again cases occur wherein the 
flexible derivative character of the principle, belief or 
practice is quite evident after a short reflection, yet so 
current is the belief or practice that for the moment 
its presuppositions are forgotten, and it too is treated 
as an axiom, or undebatable question. Political party 
platforms usually contain a large body of such state- 
ments. It follows from the above that one must not be 
too hasty in accepting the " natural necessities " argument, 
especially in social and psychological matters. 

First, there are the necessities of physical causation, the 
regularities of chemistry, astronomy, mechanics, physics, 
and so on. Man can not cancel or change these laws in any 
way ; by knowing their reliability, he utilizes them to effect 
his purposes; himself material, he incorporates them in his 
very person. Next, the laws of biology. For man these laws 
also are in mass as objective and changeless as are the laws 
of matter. To the stores of minerals and soils, to the sea- 
sonal variations of heat and moisture, of tides, of streams, of 



152 ETHICS AND ECONOMICS 

wind and water, are added forests, crops, herds, and the mi- 
grations of fish, fowl, and other food animals. Thirdly, 
and farther inward are the mental necessities ; the sense or- 
gans and their perceptions, the whole mind of the individual 
abstractly considered. Then, the mental make-up of these 
individuals as sacial beings. To all these may be added the 
necessities of mathematics, those of space, time, and number, 
regarded as somehow objective. 
Causes of Institutions 

Now all these groups represent " necessity " in some de- 
gree. Neither as abstract individual nor as social unit could 
man exist apart from the relations indicated by them. They 
therefore enter into every individual's needs and into every 
social institution ; they are part causes, in the broad sense of 
the word. When however one considers the marked dif- 
ference in these " necessities," the strictly physical, the mathe- 
matical, and the broad objective biological laws being un- 
changeable by man, while the psychological and social uni- 
formities, hardly changeable at all by the individual, are yet 
known to be changing all the time, — one sees that confusion 
will quickly arise in some minds by an appeal to " necessity," 
especially when these groups commingle in the production of 
a result. One sees furthermore that in order to call a social 
or a psychological phenomenon a " necessity," it is not suf- 
ficient merely to trace it to its dependence upon some un- 
changeable necessity, or even to some phase of one of the 
limited mental or social necessities ; one has to examine all 
the surroundings of the case. 

In one sense the question in such cases is, — the active 
cause? Thus: the qualities of coal, gold, silver, iron, minerals 
in general, and so on represent physical necessit)^ ; without 
iron there would be no iron-mining; question, — what is the 
cause of the iron industry? Similarly, without fish, no fish- 
eries ; without cereals, no agriculture, no agricultural classes, 
no agrarian parties, no agrarian politics. But though in 
human society there can be no agrarian question, unless till- 
able land and vital fertility exist, the form of the social agra- 



AUSTRIAN-YALE INTEREST 153 

rian question rests upon the relatively changeable elements 
of the problem; the natural elements are static, the human 
social elements are dynamic. 

Similarly, the maintenance of the human race rests upon 
physiological necessities, the momentary conjunction of male 
and female, and the long development following. The social 
institution of marriage rests upon this fact. The form of the 
institution as a " necessity " is not explained by finding in 
the institution a dependence upon the physiological necessity. 
The organic necessity is taken as a fixed datum. It expresses 
itself in human psychology in the sexual impulse and the 
attendant feelings. The almost mechanically acting biolog- 
ical instinct in the lower animal world becomes conscious in 
man. Physiology generates psychology. Out of the physio- 
logical and psychological states and activities arise the mar- 
riage institutions which are to regulate the sexual commerce 
implied in the physiological necessity. The form of the social 
institution is explained by the active changeable factors 
utilizing the fixed datum. Hence in a polygamous country 
women themselves are apt to think monogamy contemptible; 
divorce for infidelity is the counter in monogamous societies. 
The physiological necessity has not changed ; its impact how- 
ever is modified by the social psychology evolved. 

Private property involves an unescapable natural require- 
ment. Man must have food, clothing, shelter. Nature drives 
him to it just as it drives the animal world. The animal too 
responds to changes in nature by physiological action as in 
thicker fur for winter, while in man this response rests mostly 
on flexible mentality. Out of this necessity of consumable 
goods to support and heighten life grow the ideas of property. 
These ideas become real in external goods, means of pro- 
duction, of transportation and storage, — in a new nature, as 
it were. Each new-comer into this society must in the main 
conform or perish. The derivative laws and institutions 
change continually. The fundamental necessity of food and 
clothing has not changed. The form of the institutions and 
industries exploiting the physiological need and the forces 



154 ETHICS AND ECONOMICS 

of nature which satisfy that need depends upon the change- 
able psychology of man. 

Evidently these considerations apply to interest as a " ne- 
cessity." What are the " necessities invoked in interest-get- 
ting?" Productivity theories seek to refer interest to the 
physical causation involved in a labor-machine combination. 
Seasonal variations of fish, grain, water, and other supplies 
were taken as granted. This theory was found to be un- 
acceptable. Undoubtedly it traces interest to " fixed neces- 
sities," but these do not explain the social division of the 
product ; they are not the active elements. Other " neces- 
sities " have been invoked in other explanations. At last 
comes the Austrian- Yale school to call in " the great variable," 
time, as containing the causal element in interest. It says: 
Time penetrates all changes ; age is not to be escaped ; hence 
value in the present must differ from value in the future; 
this, for every individual; interest simply measures and is the 
product of this difference in valuations. 
Time as a Cause 

Now about time itself as a philosophic mystery, persons 
have split hairs for ages, but no one thinks that time of itself 
alone does anything. We say time destroys, time changes 
all things, and so on, but we only mean that things perish in 
time, or that all things change after a while. We look for 
positive, active, concrete, causes and relations as the deter- 
minants of changes in time. Interest, neither as merely dis- 
counting the future nor as something real, makes its appear- 
ance simply because of the lapsing of time. Time writes no 
wrinkles on any brow; care, trouble, struggles with adverse 
circumstances scar the body and the soul. The psychological 
attitude towards the future is the registered effect of concrete 
experiences ; remembered pains and pleasures, and all the 
vicissitudes of life; then by an effort of the imagination, the 
falling away of the present into the past is reversed, so that 
we seem to run up into expected and desired experiences, 
which are however similar in elements to the past. We can 
not conceive that time of itself does anything at all. We 



AUSTRIAN-YALE INTEREST 155 

look for other causes ; the hammering of outer influences upon 
us, our powers hammering back, an intricate action and re- 
action continually marking and scarring us. We " age," 
because outer and inner forces actually affect us ; these de- 
termine our attitude towards the lapsing of time. 

Though time itself is not, so far as we can see, the active 
cause of anything, still time does enter into interest. Time, 
as the resultant or concomitant of the concrete causes of our 
aging and of interest-getting, may be used as a formal deter- 
minant of interest. The idea of time lends itself to uni- 
formity of treatment. Its very abstractness admits of such 
distribution and measurement as to permit an impersonal 
mathematical discussion of interest, such as Fisher gives; 
time therefore easily gets the aspect of being the real de- 
terminant. The genuine fact however is that the interest- 
getting occurs at discrete intervals; its continuity of genera- 
tion is largely an abstraction, comfortable for the getters. 
The forces determining the getting of the interest determine 
also its distribution along the course of time. It is true that 
this or that individual entering into interest contracts is im- 
mediately confronted with the time element as determining 
his interest payments both as to rates and amounts. To him 
time seems the determinant, but he is no less under an illusion 
here than he is under an illusion in the localization of his 
sensations in space. 
Psychological Cause of Interest 

Since we must pass from the mere lapsing of time to con- 
crete causes, it follows that, if we are to get at the active 
cause of interest, we must in this theory also regard the 
mobile elements rather than the fixed ones. Plainly enough 
the Austrian theory carries us over into the realm of psycho- 
logical necessities. The theory in effect says : The necessity 
contained in Time by being registered in each mind deter- 
mines interest as a "necessity;" "time-preference" is the 
word. The explanation here enters the field of the subjective ; 
it really invites us to accept mental and social regularities, 
specifically here time and its influence on the mind, as being 



156 ETHICS AND ECONOMICS 

in quite the same class as the certainties of exterior nature. 
Hence its kinship with the commonplaces of the oneness ana 
unchangeability of human nature, of the stable foundations 
of society and the like. 

It is difficult to present the general theory, of which the 
Austrian theory is a special case, in terms which do not betray 
too fiatly its weakness. If one can remove from his mind all 
idea of evolution, and can think as in former ages in strictly 
static terms, one can perhaps speak of distinct and fixed 
grades of culture, each having its own presuppositions or 
necessities. One can say that the necessities of a lower 
culture must give way to those of a higher culture. Milk is 
for babes, meat for strong men. What is quite unintelligible 
to even the moderately versed thinker often becomes self- 
evident to the properly trained mind. Relations unimportant 
in a rude society become " natural necessities " in a higher 
civilization. However plausibly this static conception may be 
put — and it occurs again and again — it has two fundamental 
weaknesses, (a) The diversity of the actual facts of present 
and historical society and psychology is so great that the 
simple outline can not compass the details. The theory 
suited better the times when knowledge had not reached be- 
yond medieval narrowness, (b) It can not account for the 
social movements actually known to be taking place about us. 
Institutions are changing all the time. Hence the static 
hypothesis must yield. 

In place of the old theory, next comes concessions to the 
evolutionary doctrine. Development is admitted, with a con- 
sequent graduation of " necessities." A progressive develop- 
ment even in religion and in ethics is sometimes allowed. 
This however can hardly satisfy those defenders of the ethical 
purity of interest, who are sure that they have reached final- 
ities of explanation. It needs but an additional step in pro- 
gressive evolution to overthrow those " necessities " they now 
see in force. The value of the reply of those who speak with 
assurance of the unchangeable character of human nature 
is largely destroyed. For it is difficult to go a step with 



AUSTRIAN-YALE INTEREST 157 

evolution and then to escape going twain. Unless one can 
block the course of evolution, " finalities " in physical and 
social development becomes schematic, reality escapes 
through the meshes of the net. Further it is possible that 
these necessitarians in the matter of interest may mean only 
this — granted the continuance of private property, then 
interest is a necessary consequence. If this be all that is 
meant, one may reply " No Daniel is needed here ; " exactly 
this is the contention of interest critics and hence their further 
criticism of private property under its present limitations. 

It is well to be clear as to the meaning of the word interest. 
Economists use it in many senses (vd. p. 101) ; interest as 
product of machine power, interest as a discounting of the 
future, and the common loan interest which we all know of. 
The first two arose only because of the existence of the last 
and as a defense of it ; they are thought to be the " pure 
science " aspects of the vulgar phenomenon. When interest- 
taking in present society is condemned, some economists 
reply : — " Interest is inevitable, that is, machine power will 
always affect the product got out, or the future will always 
differ from the present; no economy is conceivable, of which 
these truths do not hold ; hence, and so on." Certainly true ; 
and just as appropriate as the following: — "Shall we clear 
up these pest-breeding hovels of the poor? — My dear sir, we 
shall always have the poor with us, and in dwellings, we can 
not cancel the law of gravitation or those of chemistry, life, 
and mind." When " pure science " is applied to concrete 
relations, there is always some human purpose to be sub- 
served, which qualifies the mode of the application and the 
use to be made of the results ; this, the more so, the less ab- 
stract the '* pure science " is. The social meaning of the pro- 
ductivity of a machine changes greatly according as the so- 
ciety is dominated by a small class of possessors, or by the 
mass looking to the welfare of the vast majority. 

Returning to the special case of the Austrian theory ; the 
mental necessity of the mind's attitude to the flow of time 
may be regarded from the merely individual, or from the 



158 ETHICS AND ECONOMICS 

social view-point. It is said: — The solitary Crusoe must 
discount the future, must allow for the cyclic operations of 
nature, must weigh work for present supplies against work 
for future supplies ; every man must develop time-preferences ; 
hence, interest phenomena are inevitable in any society what- 
ever. All this is as certainly true as it is true that Crusoe must 
conform with the law of gravitation so far as he rears a per- 
manent habitation on his lonely island. Interest of this sort, 
applied even in a society of purely self-dependent abstract 
individuals, seems utterly unobjectional. Crusoe could noi 
exploit himself; no member of a society of strictly self-de- 
pendent individuals can exploit himself; this conclusion is 
contained in the supposition. The supposition contains two 
confusions ; (a) the word, " interest," is appropriated to cover 
superficially similar things ; (b) an institution involving things 
in a necessary relation is sufficiently explained as to its form 
by a reference to that necessity. As well say : Man must eat ; 
therefore warehousing and our present laws of warehousing 
are a necessity; man must have clothing and implements, 
therefore department stores are indispensable. 

Now the interest of present-day criticism is a social product. 
However much each man and his preferences are scored by 
time, interest in our exchange economy is a something 
produced by one set of persons and gathered in by another 
set of persons. Unless this social relation exist, and unless 
the reaping and also the retention of the fruits be enforced 
and guaranteed by social regulations, interest does not exist. 
No individual can produce and reap interest from himself for 
himself. The essence of the relation expressed in the word, 
interest, is absent from the case of a man securing and en- 
joying or using the results of his own labors. Prof. Fisher 
classes wages, interest, profit, and rent, — all as " incomes." 
This is entirely proper for the purpose of his schematic 
treatment. But outside of his mathematical limits, namely, 
in the actual economic world, these " incomes " are vastly 
different in their social origin and bearings. To treat these 
" incomes " which for his mathematics are wholly of the same 



AUSTRIAN-YALE INTEREST 159 

class as if they were wholly of the same class for social 
purposes, is to blear the ethical and kindred aspects of dif- 
ferent phenomena. As the individual can not coin interest 
from himself, so without society's aid he can not coin interest 
from others. 

Thus, then, we see that these "necessities" appealed to are 
of different characters but that they play into one another's 
hands, as it were, by human institutions. The formation of 
institutions presupposes objective constancies and human 
psychology. Each of these two is requisite and each reacts 
upon the other. The unchangeable cycles of nature, such as 
the rotation of the earth, the tidal flow, currents in ocean and 
air, variations in seasons, these as well as the kind, the quaLty, 
and the quantity of the output of nature determine character- 
istics of human psychology. And when man has invented a 
tool, a simple instrument, or a complicated machine, he is in a 
sense reacting upon nature. He can thus through nature 
modify or even control the mode of the impact of the larger 
forces upon himself and society. Thus in general the capacity 
and the fact that man is a tool-maker gave or tended to give 
him sovereignity over all the animal kingdom. Warehousing 
and reservoir systems enable him to extract from seasonal va- 
riation large advantages otherwise lost. If the variation in 
seasonal supplies forces in man a psychological growth, not 
less does this growth react upon nature, creating, as it were, 
by tool, instruments, and complex machinery a new external 
environment, which in turn is to act upon and mold the on-com- 
ing race of men. In all this complicated drama of human evolu- 
tion, one sees the steady interaction of nature's con- 
stants and human social psychology. Nature molds 
man ; man increases in knowledge, and by using 
nature's forces in new tools and a corresponding 
social organization, he creates a new nature. The 
new generation must climb to the new height ; it must de- 
velop a new psychology. Nature with its " necessities " is a 
fixed datum ; human psychology in social relations of limited 
necessitv furnishes the mobile causal element. From this 



160 ETHICS AND ECONOMICS 

point of view, man's present individual and social psychology- 
is in the mass a product of existing institutions. 

BOEHM-BAWERK'S "REASONS" LARGELY A PRODUCT OF 
EXISTING INSTITUTIONS 

From this point of view let us then consider the various 
causes, which constitute the foundation of Boehm-Bawerk's 
psychological theory. The kernel of his theory is the under- 
estimate of the future. The kernel of our present question 
is the causes of this underestimate, or more particularly, the 
reaction of the existing institution of private property and its 
relations upon persons under it. The important thing then is 
not the " pure " psychology of time-preferences, but present 
provisions against the future. 

Now however much the future may differ from the present 
and however much man's mental and volitional weakness are 
naturally in evidence, it is clear that our institutional arrange- 
ments necessarily produce in each new generation an inten- 
sification of the phenomenon of the underestimate of the 
future Boehm-Bawerk states again and again the fact, 
patent of course to all, that the vast majority of persons 
under our economy must of social necessity prefer present 
goods to any ofifer of future goods. Physiological necessity 
grips them. There are the huge multitudes of wage-earners 
possessing absolutely no productive instruments whatsoever, 
having only their power of muscle and brain. Besides these 
factory workers and manual laborers of all sorts in material 
productive spheres, are the armies of soldiers, sailors, train- 
men, and carriers in general, merchants' aids, teachers, 
preachers, artists, actors, professional sporting men, servants 
of every class and description. Besides these again are the 
multitudes of petty proprietors, petty industrialists, peasant- 
farmers, who do possess a fractional part of the sources of 
production, but in so limited a quantity that their position is 
in many respects worse than that of the average wage-earner. 
The lower down the scale one goes, even to a certain rather 
narrow limit above naked existence, the more numerous are 



AUSTRIAN-YALE INTEREST 161 

the members of these classes. Naturally the overwhelming 
majority, whose demand for subsistence is either for a bare 
supply or for one in conformity with a more or less varying 
and not very high standard of life, are not in a situation to 
esteem future goods at all in comparison with present neces- 
sities. For example: In the United States in 1904 the aver- 
age weekly wage of factory workers was $10.06 per week. 
The five highest paid classes of these workers, diamond cut- 
ters to watchmakers, could comprise only a small fraction of 
the total; these got from $21.68 to $16.16 per week. Of the 
total, 69.3% received less than $15.00 per week, 56% less 
than $12.00 per week, 45% less than $10.00 per week. 

In 1908, 6/7 of the railroad employees in the United States' 
received from $1.45 to $2.39 a day; of the round million and 
a half, less than 14,000, the higher and other general officers, 
received an average of $9.49 per day. ' For the two years, 
1908-1910, something over 11% of the population of the 
United States was on the edge of starvation owing to unem- 
ployment ' (Kelly). An English Government Board of Trade 
report 1911, comparing American data of 1909 onward with 
British data of 1905, allowance made for difference in time, 
says that wages in the United States are 130% higher than in 
England, while food and rent are only about 52% higher. 
(N. Y. Times, Apr, 23, 1911.) If this condition should at 
the same time mean fairly equal productivity, one can judge 
what the condition of England's workers must be. ' In Prus- 
sia in 1908, seven million out of the eleven million families 
received less than $337.50 annually, eighteen millions of peo- 
ple out of thirty-eight millions received less than $225.00 per 
year. Five per cent, of the population were " well-to-do," 
that is, had yearly incomes of $2,500 and over. Ninety-five per 
cent were either " poor " or below the " poor " line ' (Taus- 
sig). It would be easy to cite governmental statistics to th' 
same purport concerning petty industrialists, peasants, and 
so on. But perhaps it will be quite sufficient for the present 
purposes to quote a few passages from a marginal utilityist 
of the Austrian school, Prof. Fetter of Cornell. " 93% of the 



162 ETHICS AND ECONOMICS 

families of the United Kingdom own less than 8% of the 
total wealth of Great Britain ; 87% of American families own 
less than 12% of the wealth of the United States." These 
figures ought to be astounding. " In Asiatic countries the 
standard is so low as to touch in large classes the minimum 
of subsistence." 

If then matters be thus in the United States, Great 
Britain, and Prussia, one can see how the scale runs down 
through continental countries even to the bare subsistence of 
the masses of Asiatics. How else can there be for the vast 
majority anything but underestimate of the future? The 
pressure is everywhere, subsistence almost from hand to 
mouth. But our institutions of private property and laws of 
inheritance turn this condition into a practically hereditary 
status of the masses, with a practically hereditary psychology 
in conformity therewith. Over against these, are kings, lords, 
millionaires, and the thousands or even some millions of in- 
terest-getting well-to-do persons. Or again to quote Fetter 
" In Great Britain, 2% of the families own 75% of the wealth. 
In the United States, 1% of the families own more than the 
99%." Prof. Fisher says of the poor man: — "a very slight 
increase in his present income will suffice to enormously 
lessen that preference" [of the present over the future], 
" The preference for present over future goods of like kind and 
number, is not as some writers seem to assume a necessary 
attribute of human nature, but depends always on the relative 
provisioning of the present and the future." " The poorer 
a man grows, the more keen his appreciation of present good 
is likely to become." He further tells us that the high rate 
of interest among negro and Russian peasants is due to their 
poverty, and to their poverty in turn is largely due their 
characteristics. " The pressure of poverty tends to enhance 
still further the demands of the present and to press its 
victim down from bad to worse ; " hence, ' aristocracies and 
a dependent peasantry.' " The characteristics of foresight, self- 
control, and regard for posterity seem to be partly natural 
and partly acquired within the lifetime of the individual," 



AUSTRIAN-YALE INTEREST 163 

" Recent experience has demonstrated the fact that these 
' happy-go-lucky ' characteristics of the American negro, 
can be largely reversed by training, if in fact they are not 
entirely due to lack of training under the condition of slavery." 
" It would be a serious mistake to assume that these char- 
acteristics of man as to foresight, self-control, and regard for 
his own and others future are fixed racial and natural qual- 
ities." Fisher tells us in effect, * the remoter the risk the 
higher the valuation of the future: the nearer the risk, the 
higher the valuation of the present;' the high rates of in- 
terest on poorly secured loans, on business ventures in war 
times, the willingness of persons in such times to pay for the 
safe keeping of their property, that is, negative interest, 
such facts point to the psychological kernel that uncertainty, 
insecurity as regards the material conditions of life-main- 
tenance, is what determines the mental attitude towards the 
future. 

Evidently the farther one goes from the realm of the poor 
into that of the well-to-do, the more closely does future value 
approximate present value. Millionaires constitute a class 
to whose members the future is in general more valuable than 
the present; because (a) for them it contains real possibilities 
of increasing their already bountiful stores, and (b) able more 
or less from a present abundance to surfeit the ordinary 
necessities, they can not possibly find a rational consumption 
of their present supplies. Boehm-Bawerk and Fisher 
acknowledge again and again that to the well-to-do a future 
$100.00 is in general just as valuable as a present $100.00. 
The mere psychology however " pure " is therefore not at all 
the essential point. The important social point is the relative 
provisioning for the future. Nor within the psychological 
field as such is the really significant point the purely mental 
underestimate of the future; it is rather the feeling of cer- 
tainty and power, or of uncertainty and weakness, as to 
future supplies. In other words the mental attitude 
towards the future is determined by objective facts 
and relations. 



164 ETHICS AND ECONOMICS 

In general then it is the presence or the absence of security 
regarding the future, which is the vital psychological po- 
sition here. Though one grant natural or even instinctive 
differences in time-preferences, our institutions mag- 
nify and tend to intensify the differences in valua- 
tions of present and future. For one point, our 
economy tends to throw upon each individual the 
whole responsibility for his economic welfare. But our eco- 
nomic and legal structures of private ownership of the soil 
and of the instruments of production strangle the majority 
at the outset. The masses are naturally and economically 
the weaker members of society; they have no access to the 
indispensable sources of production. In Europe, in America, 
in all advanced nations, the overwhelming majority are tied 
down to mere present wants. And how tied? Institutionally, 
by the laws and police of property. Without exaggeration 
or any passion at all of justice or injustice, the overwhelming 
majority must work for wages or else starve. There is for 
them no escape from this relation. Are then their wages such 
as to give to them that sense of security against the future 
which shall enable them to place the future on a par with the 
present? Absurd; judge this from the wage scale indicated 
above. With such scanty present supplies, what is their 
hope for a large provision ? Fisher may answer for us : "Ac- 
cumulation is a slow process, and especially slow when the 
great number of the poor have by competition reduced the 
value of their services so low that the initial saving becomes 
almost impossible." 

Not only is this so, but as a further consequence of the 
facts indicated, we see the institutions strengthening this very 
weakness of the mass, " The curse of the poor is their 
poverty." Constrained by exterior forces, a poor man can not 
on the average acquire a sufficiency to enable him to foresee 
the future. A round of more or less exhausting monotonous 
labor; a house barren of comforts; social relations stimulative 
of nothing but present needs. Besides the scantiness of his 
wages, his present needs determine his psychology and 



AUS IRIAN-YALE INTEREST 165 

weaken him still more. He feels only the narrow present, 
and that present permits but the vaguest possible outlook for 
the future. Naturally, necessarily his inborn weakness is, as 
it were, strengthened. Now this mental scale runs from the 
bright indefinite hopes of youthful ignorance to the stern 
hardened experience of the millions whose dim aspirations 
early and swiftly die. It is inevitable that the masses regard 
the future more or less as a thing of nought. Necessarily 
their psychology reflects the facts of their lives. If they 
think at all, they readily come to accept the idea of a 
mysterious dispensation, which allots to the favored few the 
goods of life, and to the many the right and duty to fill their 
superiors with the fruits, while they themselves are to be 
content with the husks which they share with the swine. 

In this matter their psychology is molded just as servitude 
molds the mentality of the slave. The slave in the South 
taunted his free brothers that they had no white people to 
care for them. Kindliness to the slave as an animal, splen- 
did indifference to him as a human being, an ability to abuse 
royally at times, these were for the slave a test of true gen- 
tility. The European serfs when freed bemoaned the fact 
that there was now no one to care for them in sickness, or to 
help them in times of peril or famine. Similarly dependents 
to-day accept dependence as a divine decree. If slavery can 
and could so stamp itself institutionally upon the mind of 
the slave, it is less likely that our institutions of private 
property, of inheritances and wills, which shut out the over- 
whelming majority from the productive sources of life, can 
have any other effect psychologically than to force this same 
enormous majority to underestimate the future? Certainly 
there is a difference between the present and the future, but the 
bearing of that difference economically is as little extra-in- 
stitutional as the psychology of a slave is free from the in- 
stitutions of slavery. One needs only to imagine, perhaps to 
recall, the difference in mental attitude in himself and what 
his actions would be, or in fact were, if or when he came into 
the possession of a goodly sum of money, from what it was 



166 ETHICS AND ECONOMICS 

when not having that sum, to perceive instantly that security 
for the immediate future caused a wonderful change in his 
psychology. From this he can conclude that any institutional 
change which should permanently dissipate his fears as to the 
future would make all the difference in the world in his sub- 
jective valuations. 

The like conclusions follow, when one considers Boehm- 
Bawerk's " technical superiority of present goods " and the 
v^aiting involved in modern roundabout processes of produc- 
tion. There is grim humor and irony indeed in the prop- 
osition often enough made, that since the more fruitful pro- 
ductive methods tend to longer and more roundabout proc- 
esses, and since the poor will not wait for the superior re- 
sults, they must pay the penalty in the losses they sustain. 
As if their abilit)'^ to wait rests solely on their own wills ! As 
if not merely their present unwillingness but also their native 
relative mental weakness in numberless cases were not a 
product in large part of the external forces surrounding them ! 
How long could one "wait" who received $10.06 per week? 
How much of the training necessary for the cultivation of 
" the reason that looks before and after " can be had from an 
incomes of less than $225.00 per year? The long roundabout 
process of developing rational self-control of mind and body 
is a prerequisite of mental and spiritual education. How 
much of this can be had by the 69.3% of the population of the 
United States, who receive less than $15.00 per week? This 
roundaboutness of modern processes means simply that the 
tools and instruments of production become more and more 
complex, more and more costly ; not merely this but also 
that the instruments themselves can no longer be used or 
handled by one man. The vast majority shut out by property 
laws can as little expect to participate directly in the owner- 
ship or control of such machines and processes as to cultivate 
landed estates in the moon. The cost price of even a moder- 
ately sized business enterprize increases from year to year; 
on the average it requires not less than $10,000 to make the 
attempt. One can easily see how much the technical su- 



AUSTRIAN-YALE INTEREST 167 

periority of present goods is likely to be available by the large 
numbers of the population of any modern state. 

The technical superiority of present goods, especially the 
giant tools and machines of to-day all guarded by property 
laws, works distinctly enough in fashioning present psy- 
chology. Possession so guarded forces the poor to further 
dependence ; the more complex the society, the more hopeless 
their individual situation. On the other hand, the guaranteed 
ownership of these present productive goods constitutes the 
opportunity of the rich and even of the well-to-do. These 
relations make the existence of the enterprizer possible. An 
army waiting for and dependent upon employment, the eager- 
eyed seeker for an increase of spoils of industry to be reaped, 
— the psychological product is evident. In our exchange 
society where each is for himself alone, where every man 
is thrown on exchange relations for even the primary neces- 
sities of life, where the weak are pitted against the strong, 
it is inevitable that these relations of dependence and su- 
periority should stamp themselves inefTacably upon the minds 
of those subject to these conditions, that their psychology 
should mirror the facts : — in the poor, economic weakness, 
present goods for present necessities, even at the risk of ex- 
ploitation, this or death ; in the rich, present goods with all 
their technical superiorities for the sake of a greater abund- 
ance of like goods in the future. 

Not merely do we see the ever-present molding of the 
psychology of working adults into conformity with our in- 
stitutional arrangements, we can see the psychology is form- 
ation in each rising generation. The children of the rich 
and those of the poor are born alike ignorant of all and any 
institutions, ignorant alike of present and future valuations. 
As they grow up, they everywhere come in contact with 
present active forces, the poor to feel the pressure of want 
and poverty, the middle class to hover more or less above 
need, the rich to know no care as to subsistence either for 
present or for future. The rich child secure against the 
future does not fear it. He easily learns both providence 



168 ETHICS AND ECONOMICS 

and prodigality. He quickly becomes aware of his social 
superiority, and with a modicum of intelligence, he also 
learns from his surroundings the usefulness of future income. 
With all the prodigalities he may fall into, he still as a rule 
looks with a bolder eye at future outcomes. The child of 
the poor is witness of present anxieties. He early learns to 
known wants, the pressure of present necessities. His glance 
into the future is but dim indeed. He early enters the 
struggle for existence. His school education comes to a 
Speedy close. He is soon tied to the wheels of the mill, or 
of the factory, or to the dark passage of the mine. His op- 
portunity for mental expansion is cut off. He is compelled 
to ignorance and all its consequences. As a result, " only 
those of exceptional gifts rise easily above it (their family 
grade), and only those of exceptional defects fall below it" 
(Taussig). Hence the psychological differences arising 
from economic inequality recur from generation to genera- 
tion almost as if they were strictly hereditary. 

Wholly of the same cloth as the above is Fisher's addition 
of habit and love of offspring as determining time valuations 
and therefore interest phenomena. Our institutions of pri- 
vate property, with the masses cut ofif from the productive 
sources, accentuate the underestimate of the future, make 
more powerful the provisions of the few for the future, 
make the well-to-do able to exploit present chances and to 
plan for the future increases, while at the same time the 
want and the dependence of the masses weaken their foresight 
and lessen their opportunity to learn a certain kind of self- 
control. All these practices become habits of thought, feel- 
ing, and action. Of necessity these habits tend to perpetuate 
the existing inequalities. 

The like is true of love and care for the welfare of off- 
spring. Again the curse of the poor is their poverty. Their 
scanty means and resources and their narrow outlook leave 
them but few springs of joy. Sex is among the few. The 
result is an overplus of children. In that case the struggle 
for existence becomes more intense. The outlook becomes 



AUSTRIAN-YALE INTEREST 169 

more narrow and hopeless. Soon arises the idea of con- 
straining- the children to add to the family income; indeed, 
often enough, children are desired largely and are used as 
present and future money supports. As soon as possible, 
l^oys, girls, and often the wife also, are swept into mill, mine, 
factory, and department stores. And often in large cities 
these girl assistants receive pay too scanty for mere sub- 
sistence, so that those dependent on themelves alone are 
forced by thouands into the ranks of the prostitutes. The 
new generation repeats this round. On the other hand the 
children of the well-to-do receive all possible aids to educa- 
tion. When at last their turn comes, places are found for 
them, their way to power is smoothed. They learn to look 
for and to make use of chances; for theirs are the means to 
grasp the opportunities. No doubt many of them are early 
ruined or fall by the wayside. No doubt many from the 
very lowest depths fight their way to the highest places, 
but these are after all only exceptional. Now our institu- 
tions of complete personal economic responsibility, of pri- 
vate property in the productive sources of the necessities, 
practically turn this division of the propertyless from the 
propertied class into an hereditary status. A psychology 
corresponding thereto is a necessary outgrowth, and by re- 
action, a necessary support of the institutions. Just as a 
life-long existence in caste societies breeds insurmountable 
feelings and beliefs both in the brahman and in the sudra; 
as in slave societies slave psychology is born ; as the lord 
by birth tramples upon the peasant, and the peasant accepts 
the trampling as not unjust; so with us there are millions 
and millions to whom the present social relations are the 
only right and proper thing. And relatively right and 
proper too they are. This fact however should not lead to 
the position that the socially born and guaranteed relations 
of the present day are final, inevitable, and unchangeable. 
At all events, it should be clear enough that the average 
appeal to the merely present-day psychology as the ultimate 
basis of the existing system is from a broad point of view 



170 ETHICS AND ECONOMICS 

wholly of the nature of a circle, is a begging of the question, 
— particularly when the problem is the amelioration of 
present evils, even though this should mean the substitution 
of a new system for the old. In this sense the Austrian- 
Yale interest theory must be said to be largely a mere circle. 

HISTORY OF LOAN INTEREST 

Interest as a significant social fact is far from being a 
" natural necessity " in the sense that it is independent of 
social organization. On the contrary it is wholly modern, 
a thing of recent growth. Man has traversed this earth 
some 500,000 years and more. Interest as a pervasive phe- 
nomenon of society is but a few hundred years old. Interest 
is not known among the hunting and fishing tribes, nor in 
the pastoral stage of human evolution, nor yet again in the 
patriarchal family. Still less was it known in the matri- 
archal and gentile organizations of former milleniums. In 
the gentile organizations the clan or the gens was rather on 
a communal basis. As in hundreds of tribes existing to-day, 
no member could refuse a fellow tribesman food and 
shelter. None could hold wealth or a supply greater than 
his own immediate need over against the necessities of his 
clansman or friend. Only strangers were enemies. The 
vast household economies of antiquity were organized as 
self-supporting communities. Each member contributed to 
the common product and each drew his supplies from the 
same product. Interest, the return from capital as such, was 
unknown. Similarly, according to Dr. Carl Bucher and 
Prof. Taussig, interest was unknown as a significant social 
phenomenon during the stages of medieval craftsmanship, 
the period of town economy. There production was or- 
ganized more or less for direct customers, tools were simple, 
and solidarity was stronger. Values were established more 
from the labor entering into the product. Care was taken 
to secure a livelihood for the craftsman and reliable goods 
for the customer. 

No doubt at all that in many places these last six thou- 
sand years loan interest has thrived now and then, as in 



AUSTRIAN-YALE INTEREST 171 

ancient Babylonia, Egypt, Phoenicia, Greece, and Rome. 
As the mass of production was either communal or in con- 
nection with huge state and household arrangements, loan 
interest was connected mainly with trading and commerce; 
loans were also made for consumption purposes, those of 
spendthrifts and of the necessitous poor. Wherever trade 
and commerce gained sway, as in Babylonia, Egypt, Phoe- 
nicia, Athens, Rome, the city-states of medieval Italy as 
Genoa, Venice, and in the German cities on the Baltic sea, 
loan interest appeared and flourished in spite of powerful 
opposing forces. Further, when through the advent of new 
inventions and discoveries society gradually changed so as 
to throw economic responsibility upon the individual, lend- 
ing for production purposes grew more and more, so that 
now with us the overwhelming majority of all loans are con- 
tracted in order to exploit productive possibilities. 

During all these ages, the present differed from the future, 
nature ran its course in cycles, man thought, believed, felt 
emotions, and willed, and yet interest-getting was for eons 
and eons socially non-existent or non-significant. It thus 
becomes evident both from psychological analysis and from 
historical facts that the Austrian founding of interest on 
present-day psychology is an illusion. If Prof. Fisher's 
splendidly complete schematization of present-day interest- 
economics be intended as an ultimate explanation resting 
upon the psychology of the present, it fails to take full ac- 
count of the origin and basis of that psychology. Grant the 
individualistic psychology as final, then Boehm-Bawerk's 
pioneering in his two books and Fisher's " Rate of Interest " 
may be taken as the relatively final words on interest. Touch 
the individualistic psychology with the wand of social psy- 
chology and the structure in all its nicety is seen to be a 
house of cards. 

ETHICAL STATUS OF INTEREST 

The bearing of all this upon the ethics of interest is quite 
manifest. Always interest-taking has been opposed by 



172 ETHICS AND ECONOMICS 

powerful elements of society. By natural contrast, wherever 
traces of gentile organizations remained, interest from a clan 
member would be opposed as undermining clan solidarity 
and strength ; this is seen in the Mosaic prohibition, and in 
the history of Athens. This feeling of solidarity, widened 
into general human sympathy, would condemn taking in- 
terest from the necessitous poor. Economic waste condemns 
the spendthrift. Ancient commerce, steeped in piracy, free- 
booting, and general deception, would for this association 
be under the ban. The motive of unscrupulous gain is ap- 
parent in all these cases; hence theologians repeated with Aris- 
totle that " money is of a barren breed," and used Biblical 
texts to support the prohibition of interest contained in the 
canon law. Naturally where trade possibilities arose, men 
circumvented the law by all sorts of devices, legal and extra- 
legal. Commerce and industrialism having gradually got 
the upper hand, even the church, which for centuries had 
proclaimed the Deity's displeasure at interest-taking, found 
it desirable in 1830 to revise its knowledge of divine decrees ; 
interest-taking was approved. To-day the bottom defense 
of interest is economic, — the furtherance of production; the 
bottom attack rests on economics, — a wider view of economic 
and social consequences. Evidently, ethical sentiments con- 
cerning interest have shifted with the shiftings of economic 
power ; there is nothing " final " about the ethical purity of 
interest. 

" CAUSE " OF INTEREST 

Productive Process 
One might with fair safety rest the case against the Aus- 
trian theory on the foregoing considerations. The foundation 
having been seen to be so unstable, it would seem proper to 
allow its owners to do the work of making the whole struc- 
ture more firm. But since the words " specific cause " admit 
so many varieties of application, it will perhaps be better to 
look a little closer at the driving motives and powers behind 
the phenomenon. The " cause " of interest may be regarded 



AUSTRIAN-YALE INTEREST 173 

both from subjective and objective grounds, and a question 
may arise whether these two view-points will yield harmon- 
ious results. 

Interest on capital as such rests according to Boehm- 
Bawerk upon differences between subjective valuations of 
present and future goods. At 5% a year, $100.00 in present 
goods is worth $105.00 in future goods at the end of one year, 
$110.00, at the end of two years, and so on at simple interest. 
Why simple interest and not compound interest would in- 
troduce a pretty question of the determining power of ob- 
jective social relations. Conversely $110.00 due in two 
years is worth only $100.00 at the present moment, rate the 
same. Invest $100.00 in present goods. Time rolls on. In 
exactly one year look in on the supply of goods, $100.00: be- 
hold, five additional golden chicklets are there. How lovely, 
how charming, how eminently satisfying is their golden 
splendor! Would that they had been a million, and the 
chicklets were 50,000 in number ! Time rolls on. Of course, 
— but how does this miracle of generation take place? Boehm- 
Bawerk does not take the trouble to give all the details of 
this prodigious naturalistic birth. He is so busy in working 
out present versus future values, — all be it noticed, upon 
the facts of present interest relations, — and thus finding him- 
self constantly beatified with such striking agreements and 
consonancies, that he has no room in the 852 pages of his 
two books to show in detail in the outer combination of 
forces how the miraculous birth takes place. At such a birth 
old Aristotle would have summoned solemn or laughing- 
augurs, the whole tribe of diviners and interpreters of pre- 
sageful omens, for surely the prodigy would indicate that 
the gods must be strangely incensed. 

Of course for the creation of the actual five a productive 
process must enter somewhere. Boehm-Bawerk indicates 
this fact clearly enough. If, for example, the $100.00 be left 
in a strong box buried in the back garden, then at the end of 
the year the $100.00 will still be there, (gold is tough, long- 
during metal), but the chicklets, lovely, of shining yellow. 



174 ETHICS AND ECONOMICS 

will not be added. But place the $100.00 in a proper business 
undertaking, and surely one will find the increase of five 
(standard rate so assumed). Now it might seem desirable 
to know the details of this creative production. It might 
contain significant elements. The truth of course is that 
Boehm-Bawerk knows that there must be a productive proc- 
ess, but this aspect of the matter does not fit his purposes. 
He will have this process as an acknowledged presupposition. 
On the basis of the relationship thereby admitted, he will 
attempt to find outside of it the so-called specific cause of 
pure interest, whereas the really driving force behind the 
phenomenon may lie in just that relation which he takes 
for granted. Having begged the efficient cause, he may well 
dally with formal cause. 

The general statement is that the value of an amount of 
present goods increases as the future " ripens " into the 
present. Now a completely finished article certainly does 
not undergo this increase in value; on the contrary it loses 
value as time passes. An unfinished good may increase in 
value, but then only through a productive process. But this 
productive process does not, time-like, roll on of itself. A 
productive process means labor of brains, of hand, of ma- 
chinery ; these do not come for nothing, they mean increased 
costs. Accordingly it is in general not strange that the 
transformed material should thus become more valuable than 
the old, that in the long run all these costs must come back 
in the future value of the new product, if our economy is to 
sustain itself. Certainly if there is any real interest born, it 
must be born in this process of production. Never yet has 
man found out how to manufacture say one hundred loco- 
motives, each piece of which passes through human hands, 
and then in the roundhouse storage-place find some fine 
morning one hundred and five splendid machines. 
Interest Rate and Profit Rate 

Not only is interest created in this production process, but 
profits also. Everybody admits that the interest actually had 
with us is as a rule first imbedded in the enterprizer's gross 



AUSTRIAN-YALE INTEREST 175 

gain. Boehm-Bawerk would not have us confuse net interest 
and profit. He tells us that interest expresses the difference in 
value between present goods and future goods of like kind 
and quantity. Now the profit-maker stakes his whole en- 
terprize upon this difference between present and future 
values. How then is Boehm-Bawerk to distinguish time's 
contribution to profits from its contribution to interest? If 
difference of values in time be the ground of the enterprizer's 
capitalistic venture, it would seem that more than time-pref- 
erence is involved in interest as its specific cause; some- 
thing significant seems to have been overlooked. 

Individual time-preferences vary greatly. Out of the con- 
flict of these single preferences emerges the general interest 
rate. Individual profit-hopes vary greatly. Out of the con- 
flict of these individual profit-hopes emerges the tendency 
of profits to come to an average normal rate. The older 
economists wrote volumes on the general profit rate; the 
moderns rather scorn it. They are surer of the general in- 
terest rate, even though the general schemes of the two argu- 
ments are of the same breed. At all events out of this dif- 
ference between present and future values, we might appear 
to have two normal rates, one of profits and one of interest. 
The older economists did not discover the causal power of 
time, — this was reserved for our moderns. In spite of this 
the moderns appear to use the same language as the classic 
school. These latter said that through competition profits 
tend to be equalized to enterprizers. This means that the 
rate of profit tends generally to equality. The moderns say 
that by competition of mere capitalist-lenders, interest, that 
is, the rate of interest, tends to equality for each. In neither 
case is either rate really equalized. The tendency is there. 
The profit rate is apt to be referred to the results of a single 
venture or to a single time unit. It may vary from year to 
year. The interest rate is with us apt to be relatively steady 
over a succession of years. But the same causes which nor- 
malize the interest rate over years will likewise normalize the 
yearly profit rate of any continuous business. It might seem 



176 ETHICS AND ECONOMICS 

therefore that Boehm-Bawerk has not specifically distin- 
guished the cause of interest from that of profits. The per- 
sistent intrusion of concrete facts and causes has destroyed 
for modern economists any real serviceability of the old 
schematic general profit rate for the purpose of explanation. 
Similarly concrete facts and causes dissolve the schematic 
treatment of time discount as the cause of real interest, and 
dissipate the conflict of individual time-preferences as the 
effective determinant of the general interest rate. 
Pure Time- Preferences 

But we have not yet reached the center of this Austrian- 
Yale interest theory. The quarry is elusive ; the meshes of 
the net used seem too coarse. Now, the profits of the enter- 
prizer and the net interest of the capitalist, both lie in the 
womb of time, or as Boehm-Bawerk sees it, they " ripen " 
into a golden fruitage. Although in profits, coarser motives 
and varied ingredients mingle with the time elements, time- 
preferences as such would seem to be the cause of net in- 
terest. In effect Prof. Fisher tells us that there is a " pure " 
time-preference and an " impure " time-preference. The dif- 
ference in value between " certain " present goods over 
" certain " future goods expresses a " pure " time preference. 
No doubts arising from risks of any kind, the difference in 
valuations rests solely upon the psychology of time-pref- 
erences. The rate of preference for present " certain " in- 
come compared with an " uncertain " future income is an 
" impure " rate or time-preference. The uncertainty re- 
specting future results, or the outcome of productive or other 
ventures, in short the gambling element, admits all sorts of 
additional factors, which may quite disguise or wholly over- 
ride pure psychological appreciation of time-differences. 
However this may be. it is the pure appreciation of time-dif- 
ferences which would seem to be the Austrian-Yale specific 
cause of net interest. 

We have already seen that there is a difference in time- 
appreciations and time-preferences. Or perhaps better said, 
among the motives determining present action, concepts re- 



AUSTRIAN-YALE INTEREST 177 

garding the future outcome play a diminishing role, the more 
remote in time the full outcome of the action is to be. 
Action is always in the present and is determined by present 
motives. Motives taking into consideration future results 
furnish to the majority only weak and fugitive impulses. 
Children, savages, the heedless, the masses of mankind, what- 
ever the cause may be, illustrate this fact. The causes may 
be weakness of intellect, weakness of will, physical weak- 
ness, or physical strength, economic weakness, — the relative 
powerlessness of ideas of the future to control our acts seem 
an unquestionable fact. 

To illustrate more concretely : Mr. X has, let us say, a 
fixed and certain income. This certain income may accrue 
to him in irregular or in unequal instalments. For reasons 
of his own he may desire so to change the shape of this 
certain income that it accrue to him in equal regular instal- 
ments, or in general, he may wish to change its form. For 
the sake of equality in instalments he may be willing to pay 
for a sum in his scarce times a still larger sum out of his 
abundant times, or he may refrain from consumption in his 
full periods in order to make gains from lending so as to 
fill out his lean periods. The amount he is willing to pay for 
this equalization, expressed in percentages, represents his 
personal time-preference or interest rate. This personal rate 
of his however meets with the personal rates of others. 
Compromises or adjustments of personal rates are neces- 
sitated. Out of this conflict arises the general rate of pure 
interest. 

Expressing this idea more generally in terms of our present 
economic system one may say, — in our present money-credit- 
exchange-economy, loans, incomes, personal services, and so 
on, are all capitalized more or less freely under percentage 
ideas, and in a similar way incomes whether of goods or of 
services are distributed along time. Consonant with the 
property ideas and other accepted economic concepts im- 
plied in the above is a more or less coherent psychology, in 
which time-preferences differing from man to man tend by 



178 ETHICS AND ECONOMICS 

competition to a single rate. This general time-preference, 
abstractly severed from the fear of uncertainty as such, from 
the search for profits, from the struggle for wages, from the 
demand for rents, is the source of the distinction which 
Boehm-Bawerk draws between his theory of interest and all 
former explanations. Though he may seem to have the profit 
rate and the interest rate in confusion, the charge is thus re- 
pelled. Likewise the increase in value from the process of 
production, he may claim, can not affect his solution. For, 
whatever allowances be made for increase in value by the 
caring for costs of labor, superintendence, sinking funds, in- 
surance, and so on, there still remains the fact of time-pre- 
ference, which permeates all of these elements and yet is not 
any one of them. Net interest is its result. 

Now it must be admitted that this account though deli- 
cately subtle is still very forceful. It combines with its for- 
mal element, time, such strong suggestions of a driving power 
by referring to time-preference, that one readily enough yields 
to it, as one tends to accept any authoritative statements. 
It voices so adequately the commercial business attitude of 
our own day that we are apt to see it as something express- 
ing the nature of things. Fitting so perfectly to certain 
aspects of our social psychology, it seduces us away from the 
question, how far it expresses a mere aspect, an aspect which 
is mainly a product of existing social relations, and which 
therefore might easily undergo change. 

Now the fault of this theory lies, not so much in what it 
contains, as in what it does not contain; its content is far 
short of the full facts. To explain a social result, the general 
interest rate, by means of the conflict of individual interest 
rates is acceptable, so far as it goes; but one can not stop at 
this point. When one asks what determines the individual 
rates, he must get as his answer, social facts and relations, 
among others, the general rate itself. Hence so far as this 
overlap goes, one gets into a circle, the individual rates de- 
termine the general rate, the general rate determines the in- 
dividual rate, and so on to infinity. Whether this overlap 



AUSTRIAN- YALE INTEREST 179 

be significant or not, it at least leads to a closer inspection of 
the social forces involved. 

The time-preference of any individual as a concrete fact 
can not come into existence apart from social forces, nor 
can it stand a moment w^ithout their support. The v^hole 
complex of law, politics, ethics, economics is the source as 
v^rell as the support of the status of any individual in that 
society. The person's psychology, and hence his time-pref- 
erences, is a product of the biology and the economics of 
the society of which he is a part. The time-preference of 
the individual is, as it were, an eddy in a stream. The eddy 
exists only because of a conflux of forces, partly opposed, 
partly working together; the eddy can not stand alone; 
remove the forces and the eddy disappears. The questions 
then are always at point : — What forces establish the in- 
dividual time-preference? What forces hold it together? 
How will its social power appear under different social con- 
ditions? Disregard these aspects, then the purer you seek 
to make the abstraction of time-preference, the more ghost- 
like or really unthinkable it appears to become. The com- 
bination of words is put together, but when you try to make 
a general interest rate, a social result, emerge from different 
individual rates of preference, you actually call into play 
those very powers to escape which the abstraction was made. 
It is only the radiation of these forces obscurely perceived 
which imparts energy to the abstraction. Or more generally 
put, — after you have recognized that the whole mental fur- 
niture of man is social in origin, you can not avoid thinking 
that a psychology explanation which appears to start from 
the individual and which is to carry him beyond his social 
foundations can accomplish nothing real, save only as it filch 
power from the social connections which it apparently would 
disregard. 

Now we have already seen (p. 160 flf.) some of the causes 
determining not merely time-preferences but also the whole 
biology and psychology of our society. We need not repeat 
this tale. The conclusion to be drawn seems evident enough. 



180 ETHICS AND ECONOMICS 

The " pure-psychology " derivation of interest from time- 
preference, however neatly it may schematize present-day 
commercial practices, can hardly stand as expressing " the 
nature of things " in a society different from our own. The 
social significance of time-preference springs in our society 
from other factors than the mere lapse of time. A like re- 
mark seems applicable to Prof. Fisher's statement when he 
says interest arises because of the slowness of nature and the 
impatience of man. Nature, he says in effect, has an abundance 
of riches, but it takes time and labor to get them forth. Men 
are impatient, they or rather some of them will not wait, they 
will enjoy these riches in the present; (especially true of the 
wage-earners we may suppose). Now there are senses of 
course in which these statements are true. But a moment's 
consideration shows that it is just as true that they gather 
meaning only from the existing social relations implied in 
them. The interest which Fisher would have us derive from 
these " natural " facts may find its active source rather in the 
social mode of exploiting these riches of nature than in the 
slowness of nature and the impatience of man. 
Fisher on Exploitation 

It may serve to put in a clearer light the foregoing social 
aspect of time-preference, if we add a note to what Fisher re- 
marks on the exploitation or socialist theory of interest. Prof. 
Fisher says that the exploitation theory consists virtually of 
two points: (a) that the future value of a good is greater 
than its cost of production, and (b) that the future value of 
a good should be exactly equal to its cost of production. He 
asserts that proposition (a) is true, that proposition (b) is 
false, and that (a) is fundamental for the whole theory of 
capital and interest. Now if Prof. Fisher includes in the 
future value of a good the fact of interest, then he avails 
himself either of the assumption that time-preference as eco- 
nomically and socially significant is beyond social origin and 
control, or else he is tacitly presupposing a substantial con- 
tinuance of the present economic system, or else again, not 
intending any prediction as to future reality, he is content 



AUSTRIAN- YALE INTEREST 181 

merely to express thus a social presupposition as a fact not 
likely to suffer much change in the near future, and therefore 
not within the range of a book dealing theoretically with 
the practical present. The first of these three possible mean- 
ings, namely, that time-preferences are beyond social control 
is precisel}- the point at issue ; it is the point. The other 
two meanings simply take this for granted in our present 
society. The socialist maintains that this interest-addition 
is exploitation. The socialist is willing, or ought to be will- 
ing, to accept every legitimate charge as entering into the 
value of a good: element value, form value, place value, time 
value as costs of warehousing and the like. He would cut 
out interest as resting merely on a difference in time-pref- 
erence. He would thus have proposition (b) substantially 
true, that value should exactly equal the cost of production. 
His idea is that a society is possible in which time-preferences, 
or rather the causes which determine time-preferences with 
us, shall not work out into the social results now seen. 
Fisher's rejection of proposition (b), that value should ex- 
actly equal the costs of production, would seem to imply 
that the socialist's quest here is impossible of attainment 
and is therefore illusory. For Fisher then the psychology 
of time-preference, apparently always likely to exist in the 
way at least as we see it in children, appears to have escaped 
social control. Either this, or else that the socialist scheme 
is for him too impracticable for present consideration. 

Now as a matter of fact society is constantly at work 
seeking to control preferences of all kinds, time-preferences 
among the rest. Every law enacted cuts into individual 
preferences. If you hold quite rigidly to individualistic ideas, 
it seems impossible for example to say that any one can be 
exploited by interest, who having a fixed income is willing 
to pay interest in order from pure preferences to change the 
shape of that income. But there are many presuppositions 
behind this statement. Social relations are not expressed 
but they are there with certainty. Why may not the person 
choose all his expected income at once and expend it in one 



182 ETHICS AND ECONOMICS 

long plethoric feast? What if he die in consequence, or re- 
duce himself to perfect want, or beggar his family? Shall 
his time-preference carry him into slavery? Whence comes 
his income, and what is his status as regards society about 
him? In short, social regards come driving back, and the case 
turns out to be a mere abstraction. Society thus may be 
bound for its own interests to regulate and dominate the 
time-preferences of individuals and thus dominate Austrian 
interest. This, of course, only as a mass social phenomenon, 
in which case however the Austrian-Yale theory might " suf- 
fer something of the nature of an insurrection." 

Time-preferences economically considered are reflections, 
images, results, they are not driving causes. Interest is not 
a product of the lapse of time expressing itself in conscious- 
ness through time-preferences, that is to say, this is not the 
active cause of interest. W^e have already seen from page 160 
onward, how time-preference varies with economic and other 
conditions, and how largely the economic dominates these 
other conditions. The fluctuations of the general interest 
rate indicate the reflex character of time-preferences, indicate 
that the psychology of the individual is subject to higher 
external powers. The rates of call loans show such respon- 
siveness to exterior forces that time-preference can hardly be 
said to indicate " pure " interest. The readiness to accept 
negative interest under the stress of war, plagues, or other 
disasters shows the same. The fall of the rate of interest 
as the wealth and security of society increases, as well as 
the sudden change in an individual's time-preferences on the 
receipt of a goodly sum, all these things show that the gen- 
eral interest rate, that is, the time-preference of society, is 
a result, a product, a reflection, an image of something else. 

EFFICIENT CAUSE OF INTEREST 

What then is the active or efficient cause of interest-getting, 
and what are its relations to this matter of time? What else 
in interest, in wages, in rent, and in profit, than the desire for 
gain? All forms of income alike, wages, profit, rent, and 



AUSTRIAN- YALE INTEREST 183 

interest appear in the psychological field at first as things 
to be secured somehow for the satisfaction of human desires. 
This fragmentary aspect covers the scanty meal of a laborer 
and the feast of a Cleopatra drinking pearl-steeped wine. 
The social relations and conditions of the pursuit change 
this formal statement of primary desires in the field of psy- 
chology into an intricate complex of forces, the majority of 
which do not appear in the clear light of consciousness, but 
lurk in the dim or even subconscious background. The small 
spot of conscious light moving hither and thither, stays only 
momentarily on one place according to the interaction of 
these external social forces. 

In wages you see the empty-handed laborer, shut out by 
law from direct access to the fields of production, compelled 
by law direct and indirect to his own endeavors. Orphaned 
thus by social convention, he meets face to face physical and 
psychological necessities. He can not flee, — whither shall 
he go? What means has he to travel? In the midst of 
plenty he must starve unless some one else shall fling him 
alms or offer him work, Naturall}?, making what bargain 
he can, he takes to wage-work. Time may be involved in all 
this, and time-preferences, but it is easy to see what the 
time-preference of the masses must be. In wages, one is too 
close to grim necessity to think of ascribing them to anything 
else than labor put forth against necessity. 

In profit-making you meet the same classes, the possessing 
and the dispossessed ; you meet the law-guarded tools and 
fields of production, the hungry army of laborers, the depend- 
ence of each on himself, the planless mode of supplying 
social needs, the weak, the shiftless, the strong, the unscru- 
pulous, all tumbled together, each for himself in the property- 
guarded realm, and the devil take the hindmost. Says Prof. 
Smart, " The undertaker's wage is a glorious risk, depending 
among other things upon adroitness, foresight, opportunity 
and exploitation of labor." Glorious indeed! only, what is 
the test of glory? Manifestly here again there is not much 
use in invoking time-preference as explaining profits. Time- 



134 ETHICS AND ECONOMICS 

preferences enter without doubt but the characteristics men- 
tioned by Prof. Smart seem so obviously the effective agents 
that one needs nothing more. 

In rent and in interest, again you meet with the law-guarded 
possession of the tools of production and of the fields or 
sources of supply. Again you meet those institutionally 
hungry, either from lack of head, from lack of physical 
strength, from lack of morals — what you will — socially 
orphaned, they stand and wait. On the other side is the 
land owner, the owner of houses, and in general the owner 
of the tools of production and distribution. The situation is 
easy to grasp. There is the hungry dispossessed army ; here 
are the holders of all the ways of access. The power of pos- 
session speaks : " Labor for me, and I will let you live," 
Whether it be profit, rent, or interest, they are all one in this, 
there is gain to be made, there are the weaker to be despoiled. 
For, as Prof. Taussig in his latest book (Dec, 1911) shows, 
' loans made to-day are for the most part by far made for 
productive purposes.' " In proportion therefore to the ad- 
vantages to be reaped from borrowed money, the borrower 
offers more or less for the use of it" (Steuart), "As some- 
thing can everywhere be made by the use of money, some- 
thing ought everyv/here be paid for the use of it " (Smith) — 
the " ought " here is really a " must," the social economic 
fact has been transformed into ethics. — " There must be 
profit from capital because otherwise the capitalist would 
have no interest in spending his capital in the productive em- 
ployment of laborers" (Smith). Otherwise, let the laborers 
go hang. Boehm-Bawerk at the last ditch repeats this idea; 
Taussig likewise ; and Fisher says : " But it should be added 
the cause of the fall of interest is primarily the expectation of 
small profits." 

The psychology which differences wages and profits from 
rent and especially from interest seems not so difficult to 
come at. In our society both classes rest upon institutional 
grounds, the power of possession to make gain in the future. 
In the case of interest compared with that of profits espe- 



AUSTRIAN- YALE INTEREST 185 

daily, security and few or no risks are demanded over against 
more or less of a gambling speculation, more or less of risk- 
taking. The mere interest-taker can not or will not accept the 
chance of the greater gain. He will not himself labor in the 
vineyard, nor will he permit any one else to labor in his vine- 
yard without exacting toll; he will not lend his property 
unless he get back not only the original sum but also a 
plus return. Me has the advantage. The law-guarded fort- 
ress of possession is his. The overwhelming majority are 
shut out. They must work to live; in stress they will sell 
not only body but also mind and soul. Their labor power 
is enormous; hence the infinity of opportunities for gain. 
Thus rent, profits, and interest can be born. The unwilling- 
ness to take risks, the unreadiness to put real labor and care 
of their own into the productive process, these facts com- 
bined with the " sacred " power of possession explain why 
the interest rate differs from the profit rate. 

These facts are also the essence of the economic aspects of 
time-preferences. The " pure " psychology of time-preference 
is thus seen to be a subtleized expression of very coarse facts. 
That " pure " psychology of time-preferences has existed in 
every human economy may well be granted, yet curiously, 
only where the private ownership of the sources of production 
flourishes, does interest become a meaningful element of that 
economy. The economic time-preferences of " pure " psy- 
chology are the product and the expression of the power of 
possession to extract gain. The greater the power to extract, 
the greater the time-preference, it matters little whether 
the time be present time, or be future time. 

The fact is that in the interest problem the economists 
frequently confound two entirely different questions, namely, 
what causes interest at all.^ and interest given as a fact, 
what determines the general interest rate? The unconscious 
commingling of the elements of these two problems tends to 
secure for some writers that " natural necessity " so much 
desired for " pure science " solutions. One can see this con- 
fusion in Fisher's propositions concerning " exploitation " 



186 ETHICS AND ECONOMICS 

(p. 180). The genuine social question is the social con- 
trol of interest-getting as a social phenomenon, that is, 
as concerns its social results. If interest-getting as prac- 
ticed to-day be controllable by society, and history shows 
that for eons interest did not exist (p, 170), then no 
time necessities or derivative psychological necessities as- 
sumed for the second problem have any bearing whatsoever 
on the first question. If society abolish interest-getting as 
now known, the general rate problem dissipates into nothing- 
ness, its schematic necessities vanish. It is plain however 
that a subconscious transference of elements of problem two 
to problem one must tend to disguise true relations. 

It was shown just above that the efficient cause of interest- 
getting is the love and power to extract gain. This seen, 
it is easy to understand the function of time-valuations, time- 
preferences, discounting the future, as causes of interest and 
of the general interest rate. As causes of interest they are 
names. These names, presenting individualistic psycholog- 
ical results (economic concepts) as if these concepts were 
independent, in effect beg the solution of question number 
one; that is, the power of external circumstances to mold 
psychology is tacitly cancelled. Thus though this psychol- 
ogical theory really moves only within question two, it 
pretends to have solved question one also; it commingles the 
necessities of the second with those of the first and thus 
assumes to take on a final form. 

As causes of the general rate, — this assumes interest-get- 
ting as a fact established by real causes, — time-valuations, 
time-preferences and discounts may readily enough bear the 
name " specific," but it were preferable to call them formal, 
as indicating better (a) their departure from real causes and 
(b) their relative schematic nature. Time relations in this 
matter are only formal. Life and economics are to be con- 
tinuous. The needs of the interest-getter, the holder of power, 
also recur in time. Indeed not much else remains, the in- 
terest-getter, does nothing specific; the most striking thing 
concerning him is the fact that his power being continuous 



AUSTRIAN-YALE INTEREST 187 

his product also is continuous. Time is the one of the models 
of conceptual continuity. It would thus seem most natural 
that the interest obtained should be distributed along time, 
and thus that time itself, or discounting according to time, 
should appear as the specific cause of interest. 

ETHICS OF THE CASE 

Finally as to the ethics of the case. It is to the efficient 
causes, not to the formal, that the large ethical qualities attach. 
Naturally Boehm-Bawerk does not fail to notice the salient 
points in the abuse of interest-taking. He sees the disparity 
between the position of the masses and that of the few; he 
sees the enormous temptations to plunder the weak, and that 
in our society perhaps no economic arrangement is more open 
to unscrupulous dealing than is interest-taking. Naturally, 
his problem being to find " necessities " of nature somewhere 
as the basis of interest, and having spent 852 pages on that 
problem, he can avoid further discussion. As in " Capital and 
Interest " he devoted some 100 pages to show, as he thought, 
the nullity of any exploitation theory such as that of Rod- 
bertus or that of Marx, it could not but be that he would 
eventually find interest-taking justified and also inevitable 
in any social system. As we can not think that he has made 
good his psychological base, we are hardly ready to accept 
his pronouncement about interest in any and all future so- 
cieties. The question must always be the mass social prod- 
uct and resultant of any institution. Even if we grant that 
some of the phenomena he makes mention of as necessitating 
in any human society something analogous to interest, he has 
failed to note the possible mass diflference it would make to 
society and to its members one to the other, if that necessary 
analogue of interest should be appropriated and administered 
by the society, not for the benefit of one class, namely, the 
possessors, but for the good of all. However chimerical as 
a possibility this may be, it is at least a thinkable proposition. 
If so, then a qualification of the ethical judgment concerning 
present-day interest is an open question. 



188 ETHICS AND ECONOMICS 

The ethical quality of interest-taking is not something 
which is to be determined offhand. The invoking of " intu- 
ition," that lazy method of settling disputes, will not suffice. 
The Mosaic prohibition to Jews from taking interest from 
their fellow clansmen, — probably a relic of the days of com- 
munal or gentile life, — points to other elements. The his- 
tory of interest in Greece, in Rome, the thousand-year pro- 
hibition of interest in the French law, and the still longer pro- 
hibition in the canon or church law, followed at last by the 
surrender of the church in this matter, and the present-day 
dominance of interest-taking, show clearly enough that " in- 
tuition " here will not work. The history of the connection 
of interest with the growth of private property in the sources 
of production, the observation and the analysis of the rela- 
tion as seen before our very eyes, make clear that the varying 
fortune of the ethical purity of interest rests upon exterior 
political and economic relations. 

So long as the forces sustaining interest hold the seats of 
actual power, so long will an acceptable ethics be found. 
The plain conclusion is, that when the seat of power is shifted, 
a corresponding ethics will evolve. Meanwhile, forces within 
and without seem to be hammering on the very foundations 
of society. To think that the finality has been reached and 
is here before us is to dally and quarrel about place and pre- 
cedence in a Louis the Sixteenth's court, while without the 
palace walls a grim French revolution may be thundering at 
the gates. 



CHAPTER V 

INTEREST AS EXPLOITATION 

Ethics and Interest; Interest Real. — Older Interest Theories: 
"Fructification"; "Abstinence"; Displaced Labor; ''Accumu- 
lated Labor"; "Use"; "Waiting." — Meaning of "Socially 
Guaranteed"; "Equality"; Creative Contribution Test not 
Final. — Exchange Theories of Interest: General, Older School; 
Austrian School. — "Replies": I. "Full Pay": Real Conditions; 
Labor State; Labors and Functions of Capitalists and Enter- 
PRizERs; Capitalistic Illusions. — II. "Marginal Utility" Doctrine: 
Psychology Individualistic; Normal Values; Values Rational- 
ized; Staples and Luxuries, Epkeci'ive Demand, Masses as Con- 
sumers, Life Insurance, Monopolies, World Markets, Storage 
Systems, Other Economies, "Derived Values," "Alternative 
Uses." — Subjective Values and Objective Constants; Society with 
Fixed Values NOT Monotonous; Moore's "Laws op Wages." — Psy- 
chology, A Reflex; Value Objective; Measure op Value Objec- 
tive; Labor State Thinkable; Exploitation; Interest Ethics Trans- 
figured Economics. 

The large question of the dependence of ethics upon eco- 
nomics led to the preceding discussions of this relation in 
the case of interest. The pervasiveness of interest in present 
society justifies the fullest examination of its ethics and eco- 
nomics. Interest may be regarded as arising either in the 
field of production, or in that of exchange. In the article on 
Prof. Clark's theory, taken as typical of productivity theories, 
the ethics and economics of interest were partly dealt with 
from the production view-point. The Austrian psychological 
theory really enters the field of exchange relations. Though 
its fundamental idea was found to be largely circular, it seems 
advisable to go further into the use made of it and of kindred 
explanations within the realm of exchange. 

I,et interest theories be what they may, one thing at least 
is perfectly clear, namely, that real net interest represents a 

189 



190 ETHICS AND ECONOMICS 

part of the goods created in any productive period, or is a 
claim upon them, enforced directly or indirectly by law. Real 
net interest is a material something; it must take form either 
in land, productive instruments, productive goods, or in 
finished consumption goods. Interest on a government bond 
or a pension may for the moment be represented in fact only 
by papers in the hands of the holder. But when the day of 
payment comes round, the real economic goods must be in 
existence somewhere. Law and the police will enforce pay- 
ment. The payments may be made in hard money or in 
soft money, but this money represents real economic goods 
and these goods must somehow come into existence. In- 
terest not represented by present or by future economic prod- 
ucts is a mere dream. 

Interest, as arising from exchange relations whether those 
of the present or those of the future, can not conceal the 
necessity for a productive process entering somewhere. The 
person, who exchanges or promises a greater quantity of 
future goods for a present supply, must by hook or crook 
create an equal amount of goods and also the addition 
promised. And even if " pure " interest does express essen- 
tially this difference between the present and the future 
values, interest is evidently reaped continuously as a store of 
calculable goods. Now, no way has yet been discovered 
whereby calculable economic goods come into existence save 
by labor alone. A chance find of a diamond may occur, or a 
chance find of a gold mine or of a coal deposit, but these 
sporadic cases of good luck do not and can not constitute a 
continuous economy. Economic diamonds, coal, and gold 
must be systematically hunted for and mined. Similarly all 
other economic goods of a continuous economy are got only 
by the steady application of labor. Real interest is a mass 
of goods of a continuous labor economy. Without these 
goods, time-preferences would have no foundation. In deal- 
ing with the origin and justification of interest it is there- 
fore impossible to exclude the productive process from con- 
sideration. The interlacing of social causes and effects is 



INTEREST AS EXPLOITATION 191 

too intricate to allow permanent satisfaction to arise from a 
fractional treatment of the subject of interest. 

In general then the question is in order: — What is the con- 
tribution of the interest-getter to the productive process? 
Interest theories in effect try so to represent matters as to 
justify interest as the reward of the capitalist. Using Boehm- 
Bawerk's book let us glance at other interest theories from 
this point of view. We shall see that imputationism per- 
meates them all. 

OLDER INTEREST THEORIES 
' ' Fructificaiion ' ' Theory 

One of the earlier explanations of interest and profits from 
the production side was the " Fructification " theory. This 
theory rests upon the contrast between the " fruitful " vital 
forces of the animal and vegetable worlds, and the " barren " 
powers of inanimate nature. An animal herd will with rea- 
sonable care and attention increase rapidly in numbers. A 
grain of corn produces ears bearing thousands of grains. The 
like is true more or less of all economic processes involving 
life — agriculture, cattle raising, artificial fisheries, and so on. 
The fertility of some food animals, rabbits for example, is so 
great that under favorable circumstances the race could 
quickly fill the world. 

In general the land-holder is typical in this relation eco- 
nomically. Conspicuously, even while he sleeps, the vital 
powers in nature are working for his benefit. Contrasted with 
this "fertility" of vital powers is the "barrenness" of inanimate 
forces. The tool, the machine, the motor powers of water, 
electricity, gravitation, chemical energy, none of these things 
appears to possess the self-growth of the vital forces. Only 
through constant care and labor of man are their energies 
turned to productive purposes, and guarded from the dissolv- 
ing forces of time or from running into destructive rather 
than into productive action. 

That profits and interest come from the appropriation of 
the products of the self-expanding forces of life seems at first 



192 ETHICS AND ECONOMICS 

sight a satisfactory explanation. In our society evidently 
land, herds, forests, animal and vegetable supplies and powers 
of all kinds, are bought and sold. Hence since all sorts of 
*' barren " capital can by exchange be replaced by " fertile " 
goods, land, cattle, forests, crops, by tools, machinery, money, 
and vice versa, it happens that the industrialist, the trader, 
the financial magnate can secure a reward similar to that of 
the holder of " fertile " goods. If his industrial, commercial, 
or financial venture seems likely to yield nothing, he may 
withdraw his capital from the " barren " field, and embarking 
in agriculture or the like, he may secure the aid of self-ex- 
panding vital forces. By the substitution of equivalent cap- 
itals, all capital comes to enjoy the same extra reward appro- 
priated by the holders of the " fertile " powers in nature. 

How then does the interest-getter or the profit-maker enter 
into the act of production where " fertile goods " are con- 
cerned? In the following way: Under social guarantees he 
secures possession of the fertile forces of nature and makes 
them work for him. Certainly the herdsman and the plow- 
man with all their labor do not make or constitute the forces 
in sun, soil, rain, and animal fruitfulness. While the owner 
and the laborer sleep, these powers work onward. The grain 
increases and ripens to 40, 60, and 100 fold. The herd grows 
more or less mightily in weight and in numbers. Since this 
increase is not from the laborer, he is not defrauded, they tell 
us. The increase therefore can go only and properly to the 
possessor of these fruitful powers. The natural powers and 
their results are attributed to him as his physiological output, 
as his creative contribution. The like by substitution and 
exchange is thought to hold good of the industrialist and 
others. 

This explanation is naive enough. It starts from a con- 
spicuous fact in nature, vital fertility, and then runs on into 
a delusive explanation. The exchange extension of this idea 
of " fertility " over to the " barren goods " of machine power 
is a characteric failure to reach the true reason, it is a bit of 
surface psychology. Now the fact is that for human economy 



INTEREST AS EXPLOITATION 193 

the fruitfulness of the animal and the vegetable world is 
quite on a par with gravitation, heat, electricity, chemical 
affinity, and so on, Man fronts nature. From his human 
view-point, his dominion covers everything to which his 
power extends. All natural energies whatsoever are but aids, 
sources, or reservoirs to be used by him for his own benefit. 
The fowl of the air, the four-footed and creeping things of 
the earth, the fish of the sea, all the pent-up powers of air, 
land, and ocean are tributary to him. Man has made hitnself 
king of all earthly things. As such king he dominates all. 
In respect to economic exploitation there is thus no difference 
between " fertile goods " and " barren " goods. Both are 
for human service. The idea that there is any essential dif- 
ference between them as regards their exploitability for man's 
use is a mere illusion. Both are parts of nature exterior to man. 
Both are to be used by man for his own behoof. Animal and 
vegetable fertility differ of course from gravitation, electricity, 
chemical affinity, and so on, just indeed as these also differ 
from one another. But this fertility can as little be devoted 
to human service without labor, as can the flow of power in 
a waterfall, or the stream of electrical currents circling the 
earth, or the manifold other forces playing about us in 
nature. Apart from care and labor, land, herds, crops, run 
wild, escape, or perish. Without care and labor, falling water 
will drive no turbine, nor will coal, iron, and water deliver 
a continuous stream of motor energy. In this respect there 
is no difference among them all. 

As regards the creative test the case is easily decided ; it 
represents imputation. Exclusive ownership socially guar- 
anteed is at the bottom of it all. The vital powers of " fer- 
tile " goods and the material powers of " barren " goods are 
facts of external nature; in general the product results from 
the combination of labor and natural forces; wages are paid 
for the labor power; profits and interest go to the owners; 
the natural forces are imputed to them; thus they satisfy the 
creative test. Social power establishes the relation of owner- 
ship and guarantees its continuance. This same power con- 



194 ETHICS AND ECONOMICS 

stantly regenerates in owners and others the ethics and the 
psychology which contentedly regard this output of natural 
powers as the creative contribution of owners. 
"Abstinence" Theory. 

As little can the "Abstinence," or the new " Saving " theory 
account for the production of profits and interest or justify 
their payment, save by imputation devices and misdirected 
praises. So far as concerns the production of goods, absti- 
nence or saving is of course only negative. A refusal to con- 
sume goods legitimately in hand in no wise explains the crea- 
tion of either the old goods themselves or the new goods. 
In each case these goods come from labor applied to nature. 
Abstaining from consumption is saving, is preferring a future 
pleasure to a present one, is discounting the future ; the goods 
saved are the reward, but there is yet no interest. 

Of course this doctrine of Abstinence is made to yield much 
more than the simple statement above. By bit after bit the en- 
tire present system is fetched in. The goods saved are not 
merely a store of unconsumed goods ; by exchange they are 
turned into capital, that is, into produ-Ctive instruments fr'^m 
which still greater stores may be had. Thus productivity doc- 
trines and the eternity of capital's reward get entrance and in- 
fluence. Or Abstinence does duty for labor. One might do as 
the famous mythical economic Crusoe, namely, reserve some of 
his " catch " or " find " to support himself while he labored 
on a net or a boat. Or he might abstain from nothing at all 
and merely work harder. In either case, they tell us, he ob- 
tains capital, a surplus of goods. Thus his abstinence in one 
case can be translated into labor terms in the other case. 
Now labor, and consequently abstinence, deserve its reward. 
Since therefore Crusoe has now his capital, he is entitled to 
whatever superior results he may obtain from it. 

However if one refuse to be caught by this creeping in of 
the existing system and stick to the creative contribution test, 
one sees readily enough the imputation trick and the misdi- 
rected praises. The labor test requires that Crusoe himself 
put forth energy in caring for his tools and in employing them 



INTEREST AS EXPLOITATION 195 

in production. But when instead of laboring himself he turns 
to Friday and says to him, " You may use my tool, provided 
you return it to me absolutely intact together with a portion 
of the gain or catch or product you obtain," then Crusoe is 
overstepping the test. He retains his capital without the 
labor of keeping it in a serviceable state and he likewise gets 
a portion of the product. He double counts. He does 
nothing, he reaps a reward. The assigning to him of a re- 
ward is only a disguised way of attributing to him as his 
energy the natural powers resident in the tool. Tested by a 
property idea sprung from and correlated with the output of 
labor, Crusoe is entitled to the return of his tool undiminished 
perhaps in efficiency. Beyond this he oversteps the property 
right as founded upon a creative contribution of labor; his 
exaction of more than a return of the original tool is un- 
ethical, that is, Crusoe does not satisfy the requirements of 
the test. Boehm-Bawerk's discounting of the future in the 
ease of Friday does not save the situation as regards Crusoe. 
Crusoe still reaps where he has not sown, even though Friday 
himself notwithstanding exploitation by Crusoe should get 
so far on that he can soon have a like tool of his own. 

Lassalle, Marx, and others have sufficiently exposed the 
ludicrousness of " abstinence " as the cause of capital and in- 
terest in our society; even the millionaire is now ready to 
smile at the thought of his " abstinence " as the cause of his 
wealth ; the productive process and the social organization are 
too much in evidence. The praise of abstinence is made up 
of many elements ; hence its seductiveness. It contains the 
praise of self-control — surely an indispensable quality for 
man in an organized community ; of the efhciency of ma- 
chinery — a physical science truth ; of a reserve in an emer- 
gency ; and above all, the praise of savings as the means 
whereby one can make gains out of others; this last is the 
economic body of which the first is the ethical garb. 
Displaced Labor Theory 

If none of the previous theories satisfies the fundamental 
productive test, as little does the Displaced Labor theory 



196 ETHICS AND ECONOMICS 

meet the requirements. Machinery, Lauderdale tells us, may 
take the place of any number of laborers from two to hun- 
dreds. Since these laborers if not displaced must receive 
wages, the machinery by displacing the laborers effects a sav- 
ing of wages. The laborers retained receive their pay and 
are not defrauded. The net saving in wages through sub- 
stituted machinery constitutes the source of profit and of 
interest. 

The attempt to insinuate by imputation the virtue of labor 
into this theory is evident. The power of the machine is 
substituted for the power of the laborers displaced, it is at 
the same time attributed to the owner as his power, it is held 
to be his labor output. This substitutionary trick manifest 
in the case of the owner employing the machinery is strained 
to the benefit of the interest-getter. For the pure interest- 
getter as such has nothing whatsoever to do either with 
owning the machinery, or with directing that machines be 
used, or with guiding and tending the actual working of the 
machines. The interest-getter as such stands wholly outside 
of the processes of production. Like the publican of old he 
merely sits at the receipt of the customs, and takes 
in the 3, the 6, or the 10 or more per cent, as the 
case may be. 

One needs not raise the question of the reality of the net 
gain when tlie cost of the machine is compared with the 
amount of the wages saved by displacing labor. The in- 
crease in the machine power of the world indicates that the 
substitution has proved in the long run to be profitable. 
Further, a less narrow treatment of the question would easily 
invite one to consider what becomes of the labor displaced by 
the machinery, and how fares it with the displaced laborers, 
what is their subsequent influence upon .the social relations 
and even upon the wages of the laborers not displaced — 
these and many other such questions apparently not regarded 
in the schematic statement given. Enough at present that 
this displacement indicates the power of possession to dictate 
terms, to cloak rude facts with garments of ethical purity, to 



intp:rest as exploitation 197 

mock by substitutionary tricks the requirements of an ef- 
fective labor contribution to the economic product and re- 
wards obtained. 
' * Accumulated Labor ' ' Theory 

In the theory of capital as "Accumulated Labor " there is 
again an essentially ludicrous confusion. The theory says 
in effect: Capital, as a store of goods and tools, undoubtedly 
comes from labor applied to nature; labor's reward should be 
eternal ; therefore capital as " accumulated labor " should get 
a reward. But " accumulated labor" is not the personal labor 
of any interest-getter as such. The pure interest-getter 
labors not. The capital produced by labor is not " accumu- 
lated " by the laborers. The labor accumulated in capital is 
past labor, is dead labor. Dead labor or the labor of the 
dead produces nothing and can reap nothing. The dead labor 
not. The accumulated labor of dead laborers does not inure 
to the benefit of either the dead laborers or those who act- 
ually labored. The capitalist has accumulated not his own 
labor but the labor of others. At bottom the idea in " ac- 
cumulated labor " is the imputation trick. It attributes to the 
holder of the capital regarded as a product of labor those 
wages, which laborers would have reaped, had they, rather 
than their product, put forth the power inherent in the ma- 
chines. The power of the machine is imputed to the cap- 
italist as his labor output; the substitution is enforced by 
exclusive possession socially guaranteed. 
' * Use ' ' Theory 

" Use " theories so much in favor with certain German and 
Austrian economists seem open to the foregoing criticisms. 
Interest is payment for the use of capital ; or capital renders 
services of various kinds, one of which services is of such a 
peculiar nature as to demand and to deserve a specific reward 
called interest. Whether one take the theory in a crude, 
naked form, interest as the payment for the use of capital — 
which crude form after all comes near to the real facts in 
the case — or whether one follow it into the nice metaphysical 
distinctions drawn out by its adherents, two relations seem 



198 ETHICS AND ECONOMICS 

to be indisputable facts. (a) As regards the produc- 
tive process, tlie interest-getter as such does not 
use his capital at all, Some one else, the enter- 
prizer, makes the venture. (b) The peculiar power 
of capital, different from the material powers of the 
tool or other natural agent, to produce interest goes 
by the laws of property with the possession of the 
capital ; it and the material powers are imputed to 
the owner^ as their output; the creation test is 
aborted by substitution. This is the significant point. 
' ' Waiting ' ' Theory 

Again there is the " Waiting " theory. Production tends 
strongly to-day to become more indirect, more round- 
about; hence a longer time must elapse before the 
product is secured. Now the empty-handed laborer 
will not wait this longer time for the emergence 
of the product, will not wait, for he of course as 
empty-handed can not wait. The capitalist waits, and 
thus because he waits, he secures the greater product 
made possible as a rule by the longer roundabout process. 
Hence his profits; hence his interest. 

Again however the chameleon character of all attempts to 
void the creative contribution test comes to light. Mere 
waiting produces nothing, any more than does the lapsing of 
time. The two expressions have the same meaning. " Wait- 
ing," even if it be forever, does not satisfy the requirement 
of creative effort. '* Waiting " is as negative as is abstinence. 
Laborers put their actual energy into the product. Machines 
and all other natural powers employed in roundabout proc- 
esses put actual energy into the product. What do the 
"waiters" do? What else than because of the power of 
possession to repeat the substitution trick, and thus to assert 
that the natural powers engaged in roundabout processes are 
their personal creative contributions? Their creation is only 
imputation socially guaranteed. Full hands versus empty 
hands, the result is not doubtful ; profits, rent, interest on one 
side, wages on the other, an aborted test, and a di-. 



INTEREST AS EXPLOITATION 199 

vision of the products said to be " desirable and morally 
justifiable." 

MEANING OF "SOCIALLY GUARANTEED" 

As seen, each of the interest theories touched upon splits 
asunder when rigidly subjected to the creative contribution 
test. In every case, one runs against exclusive or private 
possessions socially guaranteed. Everywhere interest the- 
ories are seeking so to phrase matters that this exclusive pos- 
session shall appropriate with social approbation an increment 
of income not earned by the labor of the appropriator. All 
the while, the natural thought behind all these attempts is 
simply this; — a certain portion of society conceives that its 
welfare is dependent upon certain conditions, and that its 
welfare and the welfare of the whole are essentially one. 
Thus their appeal at bottom is to social results. Hence they 
themselves open the way for any one to make a similar ap- 
peal. Let us then consider for a moment what implications 
go along with the words, " socially guaranteed." 

In all cases it is evident that a plexus of ethical ideas is 
involved; for examples: Man has dominion over all nature; 
the laborer is worthy of his hire ; to each his own ; no work, 
no pay ; he who will not work shall not eat ; — in short, an in- 
tricate societ}'' is implied. Various thinkers seize upon and 
emphasize parts of this group of ideas, so that we have 
absolute idealistic postulates as those of a Kant, or theological 
postulates as those of the Roman Catholic Church, which for 
various reasons are represented as the " foundations of 
society." But an impartial review of the stages of culture 
development shows that human society as a totality is too 
large for any simple absolutist theory. The one thing stand- 
ing forth clear and distinct in such a review is, that social 
welfare however narrowly conceived is the dominant inter- 
preter of social relations, and that material economic con- 
siderations in the long run effectively establish what concept 
of welfare shall rule. In short, social causes, social guaran- 
tees, social results, determine social right and social wrong. 



200 ETHICS AND ECONOMICS 

It follows that since exclusive possession is socially guar- 
anteed, society ma}'' modify, greatly alter, or even dissolve this 
exclusiveness of possession, and the interest phenomena rest- 
ing upon it. Apart from social relations exclusive posses- 
sion only means that what a man holds he must hold by per- 
sonal force against all assailants whatsoevei. This is the 
war of each against all; it means the non-existence of real 
society. There exists to-day savage tribes which more or 
less largely picture this state of affairs. In opposition to 
this, our private property idea has for its guarantee social 
conventions. Social welfare in its various phases constitutes 
the limitations of these conventions. 

Now as a fact of mere nature, no man can ever secure tools 
or instruments which will finall}'^ and for all time relieve him 
of the necessity for any further work. Certainly no large 
number of men can do so. If by a lucky chance a person 
should find himself so nicely circumstanced, he could retain 
his favorable situation only by appealing to social guarantees. 
These guarantees would in effect enable him to exploit others 
in his society; that is, instead of the war of all against him, 
he in eflfect would ask all others to subordinate their welfare 
to his, to guarantee his against their own. It follows that 
no reasonable society would guarantee to him without ex- 
plicit or implicit limitations any such boon. In nature how- 
ever no such sites or instruments are found. Fortunatus 
purses exist only in romance. 

In our society the interest-getter has managed through 
social conventions to obtain, contrary to nature, an ever-liv- 
ing supply of economic goods. He escapes the necessity to 
look for a new supply of goods ; he escapes the necessity of 
caring for the goods when found; the goods increase on his 
hands without effort on his part. The interest-getter thus 
slips free from three dooms of nature ; this, he does by means 
of social conventions, and by the same means he 
shifts these burdens upon others. To demand a 
continuance of these conventions without change is 
equivalent to asking one part of society to subject 



INI'EREST AS EXPLOITATION 201 

itself voluntarily to another part of society, regardless 
of ulterior social consequences. 

With the idea of exclusive ownership is often speciously 
coupled the idea of equality. The agreement is : — I will re- 
spect your possession of a store of goods, provided you do 
the same towards mine. This agreement enforceed through- 
out society constitutes the law of private property; enforced 
upon all, it appears to express the soul of equality. 

We have here social power masquerading in individualism, 
and seeking to secure its ethical purity in mathematical terms. 
For of course this supposition of equality in the relations of 
exclusive ownership was never debated or consciously enacted 
as a social rule. It grew up as grows a flower or a weed. 
It presupposes the decision of mature individuals. In this 
decision the young do not participate. The new-born and 
other in-comers have nothing to say in it. These have simply 
to accept it, or either to move out of that society, or else to 
change the society. The individualistic view is but a fractional 
representation of the social creature, exclusive ownership, 
trying to escape its social origin by fleeing to mathematics. 
In fact, however, it can not thus escape. No exclusive owner 
can enforce his claim by means of his own power; he must 
make his appeal to collective force. To escape the war of 
each against all and all against each, he appeals 
to social convention, he invokes the welfare of all. 
But this appeal in effect subjects him to social 
dominion. Always then the final test must be the 
welfare of society. 

There are circumstances wherein this appeal to equality 
in the abstract individualistic way is less objectionable. If 
there remain large expanses of nature from which by cus- 
tomary methods a living may be had, and if these fountains of 
supply have not been enclosed by law, then with freedom 
granted, a chance to escape exploitation by others remains; 
one may flee to nature and to his own labor for refuge. But 
when as in our society all fields of production have been pre- 
empted and are kept so by social force, inevitably non-holders 



202 ETHICS AND ECONOMICS 

and newcomers are exploited ; they live only by the suf- 
ferance of others. When the holders apply collective power 
to maintain their position, by force they cancel the appeal to 
equality ; they appeal to social welfare ; to this Caesar let 
them go. 

A cursory examination of history easily shows how often 
the meaning of " equality " and the range of " exclusive 
ownership " have changed. " Equality " in a matriarchal, in 
a slave, in a caste society, has quite different points of appli- 
cation. Sexual equality has far different meanings in patri- 
archal, matriarchal, polygamous, and monogamous families. 
Equality changes with economic relations ; witness the grow- 
ing demand for woman suflFrage, because of her changing 
economic status. The passing from tribal and national com- 
munism through every stage of gradation to private owner- 
ship illustrates all ranges of " exclusive possession." All 
so-called absolute rights are of social origin. Hence the 
socially born right of equality implied in exclusive ownership 
is necessarily limited ; it can not be intrinsically superior to 
other rights having exactly the same origin and guarantee. 

On the ground of the social origin of rights one can even 
question the finality of the creative contribution test. As 
seen, all interest theories violate the test, and now even this 
test itself may be questioned. We are far from admitting 
that a division of the product between machine force and man 
furce should occur according to their respective contributions. 
An extension of the equality idea contained implicitly in guar- 
anteed exclusive ownership, recognizing the fact that man is 
not solely a natural complex of mental-muscle force, would 
insist that such a division of the product of a combination of 
purely human forces is forbidden on wider social grounds. 
Not to the strong and to the weak according to their re- 
spective individual strengths, but to each according to the 
broader and wider diffusion of social welfare. This prin- 
ciple has been recognized in every economy in every age. 
One sees it in the family, in the city, in the nation, in the 
race. True, it does not seem to receive so explicit a man- 



INTEREST AS EXPLOITATION 203 

ifestation, because it is not enshrined so firmly in a specific 
institution, but the use and enjoyment of any public park 
illustrates the idea clearly enough. If then men themselves 
can not in conformity with a higher and a wider view of 
social welfare divide a product according to their respective 
contributions, still less can that be the case between a man 
and a machine. 

It appears from the foregoing that in the sphere of produc- 
tion, interest means a failure to satisfy the demand, " to each 
his own." The interest-getter avoids the labor of a con- 
tinuous search for supplies, of guarding against nature's 
assaults, of creating his increase. " Exclusive possession " 
under " social guarantees " subjects others to him. Interest 
means unpaid labor, means exploitation. Let the disguise be 
what it may, there are certain objective material facts in- 
volved in the act and the relations of production, which no 
amount of finely spun thinking is going to convert into sub- 
jective fancies. The seats of the mighty are pleasant indeed, 
but they are made soft and delectable by the exploitation of 
sweaty, unpaid labor. It is hard for holders of these seats 
not to be convinced of their own deserts. The most honest 
among them are assailed by every temptation to conceal the 
true situation. What ideals of art, science, culture, religion, 
and ethics, float before them ; as if these ideals were from 
them alone, were their proper social work, and apart from 
them would perish from the earth, — Imputation devices so 
seduce them. Heaven is emptied of its gods to grace their 
earthly thrones. It were so pleasant, physically, mentally, 
and spiritually, if they, the most honest among them, could 
only persuade themselves that all the balms of earthly bless- 
edness are theirs by natural necessities, by eternal ethics, and 
by celestial decrees. Hence the turnings, the windings, to 
avoid looking the facts squarely in the face. Hence the un- 
willingness to stand boldly forth, admit openly the exploita- 
tion, and defend it upon more or less selfish social grounds. 
But no, even the noble-great are too weak for this ; while the 
nakedly selfish-great wind, so long as they can, the highways 



204 ETHICS AND ECONOMICS 

and byways of ethical cant and hypocrisy, and in the end, 
fight with grim savagery for their economic advantages. 

EXCHANGE THEORIES OF INTEREST 

Assuming that the failure of all theories justifying interest 
from the side of production is now evident enough, we turn 
to those from the field of exchange. The sketch of Loan 
Interest (p. 172) prepares for this idea; Boehm-Bawerk's 
theory of interest as arising from discounting the future is 
an explanation from exchange relations. It may be remarked 
at the outset that interest theories based on the exchange re- 
letion are much more seductive than others. The reason for 
this is plain ; such theories turn upon the present structure of 
society, and upon the intricacies of exchange psychology, 
which already was found to be so largely circular. Almost 
inevitably, exchange theories run into logical circles especially 
where they seek to see interest as a " natural necessity." 
General Theory. Older School. 

Generally put, the exchange representation runs about as 
follows. A and B have each goods which they desire from 
each other; each values his own goods at certain prices, but 
they both have upper and lower limits; if these limiting 
prices overlap, A and B may come together and effect an 
exchange; each satisfies his desires, in part at least; so far, 
each gains; there is no spoliation; "a fair exchange is no 
robbery." But all society is daily performing this process of 
exchange, millions of times. Hence, the emergence of profits 
and interest. Thus say the older schools of economics. 

At the bottom of this extremely plausible representation 
are many presuppositions, without which the conclusions to 
be drawn disappear, and with which the conclusions are idle 
fancies. There are the assumptions of relative equality be- 
tween the bargainers, adequate knowledge on both sides, and 
some sort of objective meaning to the expression " a fair 
exchange." But with these assumptions granted, the pos- 
sibility of profits and interest is annihilated; each man with 
the enlightenment of perfect self-interest, free from any con- 



INTEREST AS EXPLOITATION 205 

straining outer forces, knows and exacts the social exchange 
value of his goods ; no profits and no interest are here pos- 
sible. Marx has examined and exploded this view. One 
can dislocate, by a kind of exchange, the distribution of 
actually existing things and values, but one can not thereby 
explain the production of new goods or new values. Unless 
" a fair exchange " have some objective and stable meaning, 
how can "fairness" be known at all? Social "fairness" im- 
plies a standard of value; hence, a kind of all- wisdom on the 
part of the exchangers. Again, without equality between A 
and B, " fairness " is practically impossible. In short, the 
representation is only another of those schematic forms which 
contain in the premises the conclusion desired. Only because 
the schematic form contains a plausible part-view of the 
actual facts, does it seem to yield profits as a result of the 
act of exchange. 

Interest then can not be explained by that exchange 
wherein objective equivalents are said to be given one for 
the other by persons standing upon equal footing. Hence 
the way is open to consider exchange, not as it is represented 
in the scheraatizations of bourgeois economists, but as it 
actually exists among us. 

What our actual exchange is may be inferred from the fact 
that in the retail trade hardly any of the weights and measures 
used are up to the standard requirements. Inspectors must 
be ceaselessly active and constantly clever in order to detect 
tricker3^ The impetus to adulteration of food-stufifs, cloth- 
ing, medicine, practically everything, is so powerful as to re- 
quire government experts constantly on the watch, and to 
cause the steady emission of new laws. What kind of " fair- 
ness " may be expected is seen spectacularly in the exchanges 
occurring during a " squeeze " or a " corner." Exchange 
of labor power for wages has for counters ; — strikes, lockouts, 
blacklists, boycotts, trade-unions, federations of labor, com- 
binations of employers, trusts, and the like. Free competition 
is dead; it never did exist except in theory. Concern for 
the humanity is shown in the necessity of factory legislation 



206 ETHICS AND ECONOMICS 

of all sorts. Our courts and laws manifest more care for 
property rights than for human life. The courts and laws 
constantly appeal to the ideas of the freedom, independence, 
and equality of all, as if such things as economic necessity 
did not exist. Interest and profits arising from such insti- 
tutional relations can hardly possess that purity ascribed to 
them by bourgeois economists. 
Austrian Theory of Exchange 

The Boehm-Bawerk — Fisher theory of interest insists upon 
the influence of time in this matter of exchange. Future 
goods are less valuable than present goods of like quality ; 
exchange determines this fact; this difference is interest. A 
has possession of a certain economic good ; B desires that 
good. At present, A values the good at, say, $1.00; B can 
not pay for it now. A agrees to accept for it $1.05 to be paid 
at the end of one year. Five cents is the interest paid by B 
for a present good, whose equivalent in quantity is to be repaid 
in one year. If B had had the one dollar, and had accepted 
A's offer on the spot, interest would not enter the transaction. 
Both A and B agree to the exchange, and " a fair exchange 
is no robbery." In exchanging present goods for future 
goods, a new element, time, enters the problem ; hence the 
difiference in the two sums. 

Plainly, the above is simply a picture of present-day prac- 
tices ; it appears almost self-evidently just; this, because it 
is perfectly familiar. But there are some things to be said in 
the matter. The picture is the mere surface of the transac- 
tion ; it indicates nothing of moving powers below. It as- 
sumes relative equalit}^ between the bargainers ; no constraint 
from outer forces ; adequate knowledge by both of a " fair " 
rate ; no regard to future or social consequences, if such acts 
became general; a single act of strictly independent persons. 
If these conditions do not exist, the act is questionable both 
in theory and in fact ; — minors and others under legal re- 
straint. If the conditions exist, we have on hand only an 
unreal abstraction, unreal, because like " the social contract " 
it pretends to give an adequate picture of genuine life. Grant 



INTEREST AS EXPLOITATION 207 

the assumptions, and the acceptability of the transaction is 
strictly logical; it is contained in the premises. The accept- 
ability of present-day exchange practice is derived from thus 
substituting the schematic for the real. 

Now in fact these strictly independent persons do not ex- 
ist in our society, nor is there adequate knowledge on both 
sides, nor freedom from constraint of inner and outer forces, 
nor freedom from social results. This being so, we are back 
to the facts of real exchange, seen above, which apply to all 
sorts of exchanges present and future. From the relations 
of real life, one may readily see the circumstances out of 
which, through the means of exchange relations, profits and 
interest may arise ; cheating in present exchanges, that is, 
departures from normal prices or values ; and exploitation 
in the production process for future values as was shown by 
Marx. 

Time does enter into the determination of values; "the 
tooth of time gnaws into all things," that is, concrete forces 
working in time. The destructive agencies of nature, storm, 
flood, fire, rust, microbes, insects, all these must be guarded 
against. Likewise, provision must be made for all those 
helpful processes, wherein natural powers require time for 
their full realization, whether it be for the tanning of leather 
or for the ripening of wine. Outer nature remains nature; 
goods of a continuous economy come only from labor applied, 
and labor always costs. Generally speaking, insurance, ware- 
housing charges, sinking funds, and the like cover those losses 
from the action of " time ; " since these charges must be met, 
they enter into values or prices. But where does interest 
come in? Interest is a charge additional to all these. Space- 
preferences are answered, it would appear, by transportation 
charges ; form-preferences are answered by factory charges ; 
element-preferences are answered, typically, by mining 
charges. But time-preferences are not answered, it seems, 
sufficiently by typical storage charges ; interest must be added. 
But look again, and you will see that interest is involved and 
paid in transportation charges and in all the other charges 



208 ETHICS AND ECONOMICS 

mentioned. And why? Simply because institutions establish 
the power of mere possession to extract gain. Every con- 
tinuous economy must meet nature with labor ; costs of trans- 
portation, of manufacturing, of extracting processes, of ware- 
housing, are inevitable; they represent physical necessity. 
This is not the case with interest. Austrian time-preferences 
are hopes for gain born of a class organization of our society. 
A exchanged his dollar article for a future $1.05. His 
dollar article will not of itself increase in value to $1.05 at 
the end of the year. On the contrary, his article will or- 
dinarily have yielded more or less to decay; it will have less 
serviceability, and also less value. As a natural fact time 
would not benefit A in this case. Against nature he pre- 
serves the article intact, and he also coins an additional 5%. 
This he does by exploiting B. A's abstinence from consump- 
tion does not block decay, nor create the added 5%. If he 
consume the article in the present, he has his present en- 
joyment as his reward, and he escapes care and the hope of 
gain ; if he makes no exchange with B, he has his article, the 
care, and no hope of a gain. By the exchange he therefore 
doubly gains. B can not make up the 5% save by unpaid 
labor on his part. A's psychology of time-preference means 
here, not that he prefers his goods simply at a future time — 
as individualist his only choices are present versus future con- 
sumption — but that by a social relation, he can choose the 
future without the natural accompaniment of care and the 
labor of creating an additionl 5%. If moreover the social re- 
lations force B to a state of dependence on A, the preference 
for gain is more clearly at work. Money as a device to guard 
against decay is an inept circular reply. Money means social 
relations already established; besides this, all the money in 
the world would represent only a small fraction of existing 
values ; hence the money refuge is open to but few ; this means 
that all others are open to exploitation. The idea that in- 
terest is the recompense for surrendering the power to use 
the article at will is again an attempt to read social relations 
in individualistic terms. As individualist, A chooses between 



INTEREST AS EXPLOITATION 209 

present use and future use with loss and care ; he gets no 
pay for deferred consumption ; he escapes no care and labor ; 
this feat he accomplishes only through social relations by im- 
posing labor and care on others. 

Interest is institutional exploitation. Our economic system 
rests fundamentally upon exploitation. It is a system made 
by the strong for the strong. It preaches individualism, 
every one is alone responsible for his economic situation. 
Some put this part-truth in pretty ethical phrases : — each 
gets his own deserts; the thrifty, the wise, the careful get 
their due rewards ; the lazy, the criminal, the inefficient, 
these too find their proper place. But such apologists forget 
to estimate how much our system weakens the weak and 
further degrades the degraded; they forget also to make evi- 
dent that whatever of truth their words contain lies wholly 
outside of interest phenomena. Out of the anarchy of in- 
dividualistic striving — for economically each is against alt 
and all against each, or rather to-day a few are banded for 
themselves against all, all others are only tools to be used — ■ 
it expects a heaven of social welfare. Such a system can not 
possibly land in anything else than exploitation. Its ex- 
cusatory cry is the answer of Cain, "Am I my brother's 
keeper?" The cry fits both, since both are among the mur- 
derers. 

"FULL PAY" 

Bearing constantly in mind the discrepancy between the 
objective facts of exploitation and the subjective defenses, 
we turn to one or two answers to the charge of exploitation. 
First, to the reply that in our society workers do not get 
their " full pay." Clark tells us that these workers " tend " 
to get the worth of their quota. " Tend," of course ; if they 
get anything at all, they " tend " towards their full pay ; 
but how close is the " tendency," and are there forces " tend- 
ing " permanently to ^keep them from getting their full 
product? This latter half of the investigation is quite as im- 
portant as the first half. To stop with the^ answer to merely 
the first half is to set a trap for the unwary, is to utter a half- 



210 ETHICS AND ECONOMICS 

truth that is often more misleading than no truth at all. A 
solution which, by confounding different things under the 
same name, " tends " to identity the wages actually got and 
the " full pay '*' is hardly a satisfactory answer. 

Further, the common answer denying exploitation invokes 
an illusory individualistic psychology, the surface psy- 
chology of free contract. The wage-earner, it says, enters 
the contractual relation, free and independent. He bargains 
for and gets the full market value of his labor power. If he 
is dissatisfied with the contract, he is free to break through 
it at the end of the period — indeed, in individual cases he 
may quit work at almost any time. In such cases, say the 
interest defenders, there can be no question about the foolish- 
ness of the charge of exploitation. The case is the same with 
the enterprizer, the renter, the pure capitalist ; they enter into 
free contracts with one another and with laborers; in such a. 
relation, exploitation can not arise. 

One needs not repeat here the objections on page 121 to 
this fanciful or schematized picture of real life. The conclu- 
sion is in the premises; but the premises being untrue, the 
better the logic, the worse for the conclusion. 

Since the conclusion was drawn only in order to be applied 
to real life, real life must be its touchstone. We have already 
seen the conditions of the actual struggle; competition, — on 
one side for bread, for the means of subsistence ; on the other, 
for profits and interest ; empty hands versus full hands. 
Outer forces rule the psychology of free contract. No profits, 
no interest, then no production ; stand pat ; ' the capitalist may 
change his mode of life,' and in fact does so. " He (the 
worker) will do anything so long as he can support life." 
Thus, in a strike-struggle between the two, freedom asserts 
itself; in a week or so the workers proudly conscious of 
their freedom tumble or stumble over one another to mill, 
mine, or factory; equally free the capitalist awaits their com- 
ing; the free contractual relation is entered into; profit, in- 
terest, and wages again emerge ; the capitalist again changes 
his mode of living, and the laborer, his mode of dying. There 



INTEREST AS EXPLOITATION 211 

is no possibility of exploitation here; it is the divinity in man 
voluntarily binding with celestial humility his god-like quality 
to the narrow limitations of space, time, and physiological 
relations. 

Thus if freedom and equality between individual laborer and 
capitalist in the contract relation are merely fanciful, " fair- 
ness " in wages and in profits must mean the existence of 
some sort of general scale ; " intuition " in these matters is 
an idle word. One can easily see that scales established 
under the conditions of the contests are certain to register 
forces permanently against the workers. Much in profits and 
all of interest are the proof. Privileged classes always have 
supported their virtues out of the labor of others. Or the 
matter may be tested by the idea of a social labor state ; (vd. 
p. 120). In this labor state, of which it is no more Utopian 
to dream than to dream of our society reaching the ethical 
heights of our professional moral teachers, reserves must be 
had ; it must pay administration costs, support schools, sani- 
tary organizations, incapable and aged members of the state, 
and so on. But labor for such purposes, where the product 
goes to the community and not by subtraction of a part to 
the benefit of a class of exclusive owners, can not be called 
an improper deduction from the full value of the labor ex- 
pended. 

Tested by the conditions of actual life, and by the ideal of 
a labor state, judgment must issue that in our society labor 
does not receive its full pay. In a narrow sense the enter- 
prizer is innocent as regards the interest on his borrowed 
capital ; he is constrained to pay this interest ; otherwise, he 
does not get the capital to use. But the enterprizer is work- 
ing for himself. A labor market of relatively empty-handed 
laborers, he finds in front of him ; a similar market for capital ; 
a police and army-guarded institution of private property. 
He sees a chance to make a profitable combination of these 
elements. He embarks upon the venture. That he in the 
long run benefits society in many cases is nothing to him. 
This only means that humanity as a whole seeks and presses 



212 ETHICS AND ECONOMICS 

more or less desperately and continuously to get as far as 
possible from physical necessity, to get nearer and nearer 
to a higher and liner existence. That the enterprizer subserves 
this demand does not exclude the fact that he reaps un- 
deserved gains and undeserved losses at some one else's ex- 
pense. Regularly, he must calculate for profit and for in- 
terest, and must fight for them. That in the centuries the 
world has so increased in wealth, which is seen to be so 
largely concentrated in a few hands, clearly shows that the 
undeserved gains have surpassed the undeserved losses and 
have inured to the few, but always that they arise by the 
spoliation of the many. For the relatively fixed scale of 
wages and general prices, according to which the enterprizer 
schemed out his venture, could not possibly be flexible enough 
to allow the workers to participate properly in either the 
gains or the losses. 

As to the interest-getter pure and simple, the case is even 
clearer, — he does nothing. "What," exclaim some persons, 
" Interest-getters do no work ; why, look at their cares, their 
anxieties to avoid misinvestments ! What labor they must 
put forth to guard against mishaps, false judgments, and such 
failures as will sweep away all their capital, and thus reduce 
them to the ranks of the wage-earning proletariat ! " Ob- 
serve the numerous business failures, and with Prof. Fisher 
be rather pleased with the phrase " from shirt sleeves to shirt 
sleeves in four generations." But observe further however 
that this is no denial of spoliation. All these capitalist-labors 
are the search for spoliation opportunities, this and nothing 
more. That the capitalists often fail means only that their 
particular exploitation venture miscarried ; this does not can- 
cel the exploitation involved in every jot and tittle of interest. 

For the most part the capitalist as such is confounded with 
the enterprizer. What then is the function of the enterprizer 
in social production? Much rests upon the answer to this 
question. Not superintendence and ordinary administration ; 
these are purchasable at various rates. Well then enterprize, 
progress, in a word, initiative. Now it is true that our society 



INTEREST AS EXPLOITATION 213 

does seem to place the initiative largely upon the individual; 
he is to see the chance, and apparently " at his own peril, not 
at society's, he must exploit it," And it seems probable enough 
that any differently constituted but progressive future society 
must find a stimulus to initiative and the corresponding ex- 
perimentation. But observe that this defense is partly cir- 
cular, and also that it does not exclude spoliation, nor does 
it find any productive function for the pure capitalist. It is 
partly circular, because law-guarded exclusive ownership that 
can wait, practically forces others to come to the holders; 
these allowing the project to go through claim to be the for- 
warders of progress. Facing the holders is the army of the 
dispossessed waiting for the command ; but the holders always 
try to minimize the costs of the experiment by pressing on 
the wage scale. That they at times forward progress is no 
merit of theirs; their quest is, not progress, but gain; prog- 
ress is only an accidental by-product; much more are they 
initiators of vice and degeneration, — the psychology and de- 
cadence of the wealthy is historically proved in individuals 
and in states. The interest-getter as such has no productive 
function, he is only a receiver, a consumer good or bad ; as in- 
itiator, he is an enterprizer looking for gain by exploitation. 
Not that there are not many enterprizers and capitalists who 
are really noble men — they do not understand their position 
— but, the praises of the enterprizer are largely only appre- 
ciations of the greatness and the necessity of capital (ma- 
chinery) and of intelligence in the economy of an intricate 
social organization. Appreciation of these things is not a 
proof that present society has found the most effective com- 
bination of these factors. 

It is false then that the workers of our society get the " full 
value " of their product. Averages " from shirt sleeves to 
shirt sleeves in four generations " do not eliminate the spolia- 
tion running through the four generations. The statement, 
often urged as a defense of present arrangements, that event- 
ually by competition all labor is benefited is no denial of 
exploitation, it is mere palliation ; it admits present spoliation, 



214 ETHICS AND ECONOMICS 

and this is the significant point. The palliation is much as if 
the slaveholder said to his other slaves : — " Behold, I give 
you some of what I got from my slave, Theophilus. Is not 
slavery a beautiful, self-correcting institution? See, how you 
all participate in its benefits." Indeed the cases of the slave 
and the wage-earner are much alike ; army and police law 
supported the master; army and police law support the cap- 
italist. The slave was exploited openly. The wage-earner 
is exploited circuitously in the dark. Essentially there is no 
difference in the kind of exploitation, or in the causes. 

Not unnaturally do capitalists and the defenders of cap- 
italism fall into illusions about the exploitation of the slave 
and of the wage-earner as such. Our society on the surface 
fosters the belief in freedom and self-dependence. The man 
of business affairs, for the most part ignorant of the historical 
development of society and of social and sociological prin- 
ciples, feels only the pressure of present practices and the 
business tendencies about him. He is in the midst of his 
own struggle for existence with surrounding forces. Out- 
side he finds men seemingly clothed with independence, but 
weak, heedless, unreliable, incompetent, lacking initiative. 
The slogans, " each for himself," " experience alone is the 
great teacher," " the fittest survive," " real manhood is from 
within, and only such manhood has intrinsic worth," he has 
heard directly and indirectly so many times, that consciously 
or unconsciously he acts upon them. Indeed the conditions 
of the surrounding struggle force him for the most part to 
the acceptance of them as principles of action. Besides this, 
he finds also a slavish subserviency in many, a readiness from 
self-interest to forward his schemes ; the greater his success, 
the greater the subservience and the more slavish the atti- 
tude ; the more his practices find acceptance, the more ethical, 
that is, right and proper, they become. As a result the psy- 
chology of the lordly class is generated with a whole system 
of corresponding ethics. As the king can do no wrong, a 
thousand satellites and parasites whisper or proclaim it to him 
day by day, so a king can not exploit any one in his kingdom. 



INTEREST AS EXPLOITATION 215 

A like attitude but with declining- pretensions characterizes the 
descending scale of the nobility. These people can not con- 
ceive themselves as bound by an}- such principle as a labor 
contribution on their part to the production of the goods 
they consume. A corresponding slavish psychology is the 
counterpart generated in their subjects. An analogous psy- 
chology exists among us to-day. Though the slave willingly 
as it were accepts and may even glory in his servitude, he is 
exploited none the less. And though to-day on the surface, 
the appeal is made to freedom, self-dependence and so on, 
every one who wills to see knows that in vast mass the free- 
dom and the independence are chiefly words only and not 
real facts. 

As a large social and sociological fact, the problem is surely 
d'ifificult enoug-h. There are, in humanity generally con- 
sidered, great and insurmountable differences mental and 
physical between races and between individuals of the same 
race. Different creeds and cultures reflect these varied ma- 
terial, physiological, and mental foundations of social struc- 
tures. Between races arise manifold problems similar to 
" white men's burdens." Necessarily, economical and ethical 
relations must alter from race to race. Various ideals arise 
concerning such interconnections. Something similar to this 
holds between the individuals of the same race. These are 
the records of history, which at the same time demonstrate 
change. 

Any one in our society who stops his reflection merely at 
the facts of the heedlessness, weakness, and the lack of re- 
sponsibility of the great majority, will sympathize with the im- 
patience of the enterprizer, and will readily seize upon the 
words, — " there is no exploitation, it is all their own fault, let 
them pay the penalty." And he will be as nearly right as is the 
customary judgment upon the social evil, prostitution. How 
many of the smugly self-satisfied who so readily say, " it is all 
her own fault, let her pay the penalty," know that the prostitute 
is a necessary product of our capitalistic society? How many 
of them know that the body and the soul of the harlot are 



216 ETHICS AND ECONOMICS 

" withered and sear " almost to the center because of eco- 
nomic want? This paid woman of pleasure who violates all 
feminine instincts and training is often at first, like Fantine 
in " Les Miserables/' the love-beckoned victim of her truest 
femininity, and still like Fantine preserves to the very end 
a taintless purity; more often she is the prey of hope caught 
in the meshes of a profit-seeking chicanery and violence ; still 
more frequently, duped by ignorance, dulled by stupefying 
surroundings, starved by insuflicient pay, in short, broken by 
economic want, she is coaxed, urged, lured as a dumb animal 
to the shambles. There, ever}'- element of personal dignity 
outraged, she is day by day blasted by the passion and the 
contempt of those who use her and yet brutally trample her 
under foot. Her bitterest poison is drizzled over her by 
women who are reared in such mist-laden idealities as to lose 
touch with the actual world. These, bewildered, disgusted, 
filled with blind pride — God, how I thank Thee that I am not 
such as she — shrink repellantly away and even draw back their 
skirts at the mere sight of the harlot, instead of seeking with 
compassionate understanding to aid the fallen. What woman 
needs is less individualistic private property consciousness and 
more sex class consciousness. It is easy to see that woman 
armed and defended with her own ballot would avail much 
in the long run to remedy masculine legislation bungling for 
ages in this matter, the capitalistic form of prostitution. To 
say " it is all her own fault " stealthily satisfies self-esteem 
and saves much thinking besides. But the fact is, according 
to repeated declarations of welfare workers, that the heart 
of the whole question of prostitution as a social problem is 
economic poverty. 

The like is true of the weaknesses of the multitudes of the 
labor army as contrasted with the unresting enterprizer. But 
as in the old kingly economies, a corresponding psychology 
and ethics are born, so a different psychology and ethics arise 
as labor becomes more conscious of itself. To-day the eco- 
nomic status of labor is changing, and the ethics change ac- 
cordingly. Hence to-day our ethics seem to demand the 



INTEREST AS EXPLOITATION 217 

creative contribution labor test. Newer economics have 
superseded the divine kingship test, the caste or birth test. 
Our economists labor to satisfy the production test. Another 
ideal is generated. Nowadays we hear much of the duties 
of wealth. A call is made that these " stewards " perform 
other and more productive social service, — mere consumption 
and distribution by consumption seem not to fit the case. 
Slowly but surely the idea makes its way that genuine no- 
bility of culture (not waxing on the degradation of other men) 
can root only in the self-maintenance of its holders. The 
nobility of labor supplants the nobility of birth and of caste. 

MARGINAL UTILITY REPLY 

The Austrian marginal utility school however has orig- 
inated the wiliest of all the defenses of interest-taking, the 
most refined attempt to cancel the objective facts on which 
the charge of exploitation rests. Boehm-Bawerk is one of 
its greatest exponents. He rejects exploitation emphatically. 
The choral song of his followers swells down the gale. What 
then is this subtlest of all defenses, which seems to achieve 
the impossible, namely, by mere thinking to abolish objective 
facts? 

At the basis of Boehm-Bawerk's critical rejection of all 
former interest defenses lies this theory of final or marginal 
utility. Especially is this in evidence with physical pro- 
ductivity theories ; he in part turns the edge of the productivity 
doctrine by distinguishing between value-product and phys- 
ical-product. Fisher too follows and adopts this point. 
Though the physical product is increased by improved proc- 
esses and tools of production, yet since in general the larger 
the supply, the less the value per piece, it may well happen 
that the increased product does not have a correspondingly 
increased value. ' To assume that it does have a value in- 
creased in due proportion is to beg interest ; ' says Boehm- 
Bawerk. 

This doctrine has already been seen in one phase, namely, 
as applied to the valuation of present and of future goods. 



218 ETHICS AND ECONOMICS 

But to repeat more generally. Individuals differ in their 
valuation of the serviceability to them of various goods. 
The final consumer in a market open to all is the ultimate 
judge and determiner of values. The valuation which the 
final consumer puts upon an article expresses for him the 
usefulness of that article, and so far forth, this fact decides 
how far all the preceding processes and tools of production 
have any value at all. If the article fall absolutely dead 
upon the market, then it is valueless, and every bit of labor 
and material contained in it is an economic loss or waste; 
unless, indeed, the article can be turned into some other than 
its originally intended channel, in which case its value is 
that which it obtains in this new use, and this value is then 
imputed and distributed along the whole line of its production 
processes. Present values are the only real values. No 
living man can tell what will be the value of the future goods 
resulting from his present labors. Value of future goods is 
a speculation, is guesswork, is a gamble in futures. 

How can the wage-earner be defrauded of that which has 
yet no existence, of that whose existence itself as well as its 
amount is entirely problematical? The only real values are 
present values. Free exchange by fair competition in the 
open market determines the present value of labor power 
just as this same open market determines the present value 
of the finished and unfinished products of past production 
processes. By exchange, the wage-earner enters into con- 
tractual relations with employers. If he be dissatisfied with 
his bargain, let him make another, or seek his economic sal- 
vation in a dift'erent field of free activity ; all are open to him ; 
he is not a serf or a slave. The wage-earner surrenders every 
right and title to the non-existent future value of the results 
of his productive efforts. What is done with his power and 
what results from his activities, he has no more concern with, 
than he has with the agricultural products of a farm in Mars 
or in the Moon. Rodbertus and Marx, we are told, simply 
deal in sophistries, and are intellectually and ethically blind 
and dishonest to assert that the wage-earner is despoiled. 



INTEREST AS EXPLOITATION 219 

They are stirrers-up of factional and fanatical class hatred 
and strife. They keep labor and capital apart, are at bottom 
enemies of the dependent poor, are assailants of the welfare of 
society. Whereas the wage-earners should be grateful in- 
deed, that there are those ready and willing to breast the 
tempests of future storms and changes of value, while they, 
the workers, are sheltered from these distressful disasters. 
All progress is owing to these heroic, energetic souls; the 
peaceful, vine-clad cottage and fig tree of the worker (if in- 
deed he possess such), is guarded by the dauntless breasts of 
great-souled capitalistic enterprizers. Exploitation charges 
are an absurdity of the first degree. 

In like manner net interest exploits neither enterprizer nor 
worker ; — not the worker, for, as above, his only concern is 
his wages ; not the enterprizer, for in net interest the enter- 
prizer pays the merely holding capitalist the current present 
value of capital as such. There is open competition in the 
capital market. The contract calls for the eventual return 
of the capital sum plus the current price for its use. The 
capitalist discounts the future. As such, the capitalist has 
no concern with the products, their value, or their disposition. 
He neither defrauds, nor is he defrauded. The enterprizer is 
free to embark or not, there is no compulsion about the 
matter. He, too, is or may be, a freeborn American king. 
A similar statement may be made of the holder of land, the 
receiver of ground rents. 

CRITICISM OF FINAL UTILITY 

This theory of value, its origin and measure, has become 
so strongly intrenched in our college text-books on economics, 
that it may justly enough be called the dominant or modern 
economics. 

At first sight and on the surface, this reply seems toler- 
ably conclusive. If one is required to accept the words of 
the bond, and is not allowed to go beyond the letter, then 
tears and bloodstains from heart throbs of misery do not 
spot the white ermine, the ethical purity of enterprizing cap- 
italism. All is " desirable and morally justifiable." 



220 ETHICS AND ECONOMICS 

It is a favorite shibboleth, the old cry, " Truth is mighty 
and will prevail." it is bandied to and fro against Marx; it 
is hopefully rested upon by those who preach the ethical sav- 
ing graces of capitalism. It is especially needed for the present 
case, since this marginal utility theory is a birth or a discovery 
of the last 25 or 30 years. Over all the aborted or misshapen 
monsters of former interest theories, the newer theory has 
worked its way to influential station, to the place wherefrom 
is clearly visible its ethically pure and radiant splendor. 
However let us venture a little to look into its antecedents. 
Certain of its features have a familiar aspect, and we think 
to discern more or less dimly through the haze still other 
well-known lineaments. 

Notice first the old friends, exclusive owners, empty-handed 
laborers, the free, equal, independent contracting individuals. 
Once more these stand forth clearly, or from the darkness 
move the masqueraders. Once again a socially born prop- 
erty right seeks to override any other similarly born and 
sociall}' guaranteed right ; or otherwise expressed, it seeks 
to press its claims so far as to make itself unlimited, and thus 
under the guise of eternal truth and ethical purity, to cancel 
other rights. There is no need to repeat the former criticism 
here. " He that heareth, let him hear." 

The psychology it assumes is that of a being who knows 
only of momentary present desires and their gratification, 
as if these desires were not conditioned by external objective 
elements. The marginal utility psychologizer appears as a 
creature whose decisions rest only upon the purely personal 
fiat of a Avill free in the fullest sense of the term. Thus wage- 
earner, peddler, merchant, banker, millionaire, capitalist, all 
appear upon the open market. Open markets are supposed 
to make each participant aware of the essential elements of 
the total situation and thus to guard against cheating or 
" unfair " gains. All in the market have their subjective 
valuations of the goods they purpose to exchange. All are 
alike free to seek their economic gain. All are alike free to 
accept or to reject any and all offers tendered. They make 



INTEREST AS EXPLOITATION 221 

their contracts as best they can. Exchanges are effected. 
Values emerge, guess values for intermediate goods, final 
values for consumption goods. 

Still normal or market values do become established. The 
buyers and sellers appearing in the market are not wholly 
dominated by the desire for concrete utilities for their own 
direct service. Final consumers may feel this to be their 
main consideration, but " much the largest part of the posses- 
sions of the community " is " inchoate wealth " (Taussig), 
that is, is not consumption goods. Gain is to be had, and 
even the final consumer is not wholly free from this desire of 
gain. Bids are made by buyers and sellers. Instantly the 
status changes. A mass of subjective valuations vanishes 
heated hopes are blasted, fairy dreams go awry. Then there 
is higgling on the market. In the end, by competition be- 
tween buyers and sellers who happen to have upper and lower 
limits to their valuations or prices, a value or price is found 
which clears the market. This is the marginal price and the 
market value. Sellers, who demanding more, can not or will 
not sell, and buyers who will not or can not give this price, 
are excluded. The exchangers exchange and withdraw ; 
those excluded — they also withdraw. The market for that 
day or that moment is closed. This process repeats itself 
every hour of the day for every sort of salable article in the 
markets of the world. A normal marginal market price or 
value for every article is thus established in every market. 

VALUES ARE IN A SENSE IMPERSONAL 

These exchange ratios are, on the surface, results of the 
momentary determinations of free individuals, yet in this open 
market of the day, a mass of arbitrary personal valuations 
is blown away. The first real bid clears the brain of a thou- 
sand hopes, fears, and fancies. The individual finds himself 
balked more or less by the desires of other persons. These 
place barriers to his arbitrary choice. Individualistic psy- 
chology crumbles. But all this is still merely on the surface. 
Why are the limits of the values of the actual exchangers 



222 ETHICS AND ECONOMICS 

what they are? Why are some unable or unwilling to ac- 
cept or to reject, to make or to refuse to make bids or offers? 
It is not mere arbitrariness on their part. Why are so many 
excluded from the market and what becomes of them? Thus, 
it seems, the pretty citadel of an exchange economy is the 
central point of stormy external forces. The free exchange 
is bound by outer determinants. In a word, the origin and 
the significance of exchange psychology are in debate. The 
whole question of interest and exploitation is removed 
from the neat showcase of individualistic psychology 
and is brought into the realm of material and psychological 
actualities. 

The marginal utilityist who accepts without question the 
right of private property, free contract, equality, free and in- 
dependent self-determination, free competition, open markets, 
adequate knowledge and singleness of gain-purpose, is at 
perfect liberty to schematize under the same heading, the 
bargains of the millionaire glutting his fancies, and those of 
the wage-earner dodging starvation by a day or a week. 
With Prof. Fisher, he may count everything coming in as 
income. He may place the idle momentary whim of the 
plutocrat or of the spendthrift in the same category as the 
laboriously reasoned-out decision of a long-headed person 
seeking to frame a scheme of continuous economy to cover 
years, and to result in a vast material or spiritual uplift of 
self, family, or society. A Gutenberg bible, a painting by 
Hals, a Hope diamond, a slave (man or girl, especially girl) — 
these are on a level with wheat, beef, cotton, oil, iron, copper, 
carpenters' tools, steam engines, and fertilizers. The schema 
of value must take in all these exchanges; the formula must 
cover all, no matter how much it may distort, or wholly fail 
to elucidate significant social relations. On the surface, the 
theorist deals with choices and exchanges. Thus the utility 
psychologizer aiming at a generality so wide becomes so 
superficial as to annul for the moment the social origin of 
the very psychology he schematizes, and to blear the social 



INTEREST AS EXPLOITATION 223 

significance of the forces creating- the situations he seeks to 
formulate. 

VALUES MAY BE RATIONALIZED 

But for social judgments, the important questions are 
whether all these valuations are of equal importance, whether 
they may not be discriminated, what are the outer forces con- 
trolling them, what are the social results, in short, whether 
or not, even in our exchange society, individual valuations 
might not be subjected more or less to a rational social con- 
trol. Now the distinction between fad and fancy articles and 
staples is not without reason and significance. It is of course 
not easy to draw the line with close mathematical accuracy 
between necessaries and luxuries — there is in fact no such 
line, only areas more or less broad for different economic 
classes and different temperaments — but easily enough the 
vast majority of the material products of a continuous 
economy can be separated into staples and " fancy " goods. 

There is no need here for severe mathematical accuracy. 
Accordingly, as being at hand, we took a " World Almanac," 
that of 1910. From this the exports of the United States 
amounted in round numbers to 1,670 million dollars. Now 
one would hardly call " agricultural implements " fancy art- 
icles, nor " coal," nor " copper," nor " fertilizers." On the 
other hand one might perhaps easily enough find fancies 
among " animals," " copper manufactures," " furs," " marbles," 
" malt liquors," and so on. Make a fairly liberal division in 
favor of fads ; say, of 7 million for " rubber," 3 go for auto- 
mobile tires of the rich ; or of 22 millions for " animals," let 
5 go for " fancy " animals. Call all " furs," " fancies " or 
"luxuries;" of the 147 millions for gold and silver, call 50 
millions for " fancies." Thus by roughly guessing, liberal to 
fancies, get a division and sum it up. Of the 1670 millions, 
you will find 140 millions for " fancies," that is, less than \Q% 
of the total exports were articles of luxury. Treat imports in 
the same way, but be much more liberal in favor of luxuries; 
count all *' furs," " wines," " art works," etc., as luxuries, and 
find that less than 20% of the total imports can be counted as 



224 ETHICS AND ECONOMICS 

luxuries. Of the world's production of gold about 25% 
goes into the arts, call this luxury; the rest goes into money. 
Something less than one-half of the world's production of 
silver goes into industrial or art uses. Factory products of 
the United States in 1908, summed up to 115 billions of dol- 
lars — factory products are hardly likely to show a high per- 
centage of " fancies." Coal production in United States, '07, 
$662,000,000; Crude petroleum, '07, $490,000,000; no fancies 
in these. Mineral products, '08, $1,506,000,000; $50,000,000 
"fancies" (gold and silver). Tobacco, '08, $74,000,00; say 
$25,000,000 for "fancies." Oats, $381,000,000; Corn, $1,606,- 
000,000; Wheat, $617,000,000; how many "fancies" here? 
Farm products, '07, $7,412,000,000. Domestic animals on 
farms, $3,000,000,000 ; not on farms $214,000,000 ; 6% as " fan- 
cies " would be rather generous. Cotton crop, '08, $681,00,- 
000. Hay, $635,000,000. 

Thus one sees that whim, fad, and fancy articles, luxuries, 
in short, can consume but a relatively small fraction of the 
products of the business and of the exchanges of our day. 
We shall feel greater confidence in this conclusion, if we re- 
member that luxuries are for the rich. The number of the 
rich is small, and their final consumption demand can be for 
only a small fraction of the whole output. " Two per cent, 
of all families of the United Kingdom own 75% of all the 
wealth, while 93% own less than 8%. One per cent, of all 
the families of the United States own more than the remain- 
ing 99% ; 87% own less than 12% of all the wealth." (Fetter.) 
The digestive or direct consumption powers of any one how- 
ever rich are after all quite limited. The overwhelming ma- 
jority of consumers are the poor and the lower middle class. 
Goods must be made for them, and social values must in the 
long run be determined by them. From this, one sees that 
products and their values must in the average con- 
form with the permanent recurring wants of the mul- 
titude. Outer conditions dominate the psychology of 
buyers and sellers. It is among these causes, not 
amid the irridescence of the act of exchange, that 



INTEREST AS EXPLOITATION 225 

one must search for the factors of value, of interest, 
and of exploitation. 

The distinction between staples and luxuries and the im- 
mense difference in their total amounts, merely express the 
fact that a complex continuous economy is utterly impossible, 
unless the mass of social interrelations be dominated by more 
or less calculable rules, norms, or principles. Society must 
bottom on rational foundations, that is, upon practices and 
connections which are external, objective, such that pass be- 
yond and quite completely control the individual. Thus in 
values the effective demand at any particular moment for any 
kind of article rests upon the ability to pay. This means 
that external forces determine this or that person's economic 
power; this fact of course is reflected in his psychology. 
Hence even final consumption goods, whose value is alone 
final according to this school, can not have a so-called final 
value apart from preceding general objective tendencies. Thus 
a pleasure ride in train or in trolley is a final consumption of 
some element of the transportation system used by the 
pleasure seeker ; but the price put upon the ride presupposes a 
million-fold set of relations which have had and are still to 
have a continuous existence. The food on the table of the 
millionaire, as well as that in the hands of the travelling con- 
struction crew, presupposes the same idea. The valuations 
of buyers and sellers, seemingly so arbitrary in momentar^v 
acts of exchange, are molded through and through by such 
facts and objective principles. Even the luxuries and fancies 
of the rich are subject to like influences by no means dis- 
regarded by the rich themselves. A continuous intricate ex- 
change economy even as regards final consumption values or 
luxuries is impossible, if producers have no calculable rules 
to work on. Chance " finds '' can support no regular social 
system. The case is infinitely stronger as concerns staple 
goods. 

The situation is entirely like that of life insurance. To in- 
sure or not to insure seems quite as arbitrary and indeter- 
minate with this man or that as a utilityist psychologizer 



226 ETHICS AND ECONOMICS 

might desire. The subject is free to insure or not. If he in- 
sures, he stakes to die within a certain time. The company- 
takes the other side. No power on earth can tell when the 
man will actually die. Yet insurance businesses thrive. A 
carefully and honestly managed insurance business, especially 
if on a large scale, can not possibly fail. Production of 
staples stands in exactly the same situation. There may be 
individual failures here and there, just as insurance companies 
are hit now and then by vast or concentrated disasters; but 
in the long run, production for a continuous exchange society 
is impossible apart from general calculable elements or prin- 
ciples. On the other hand one may at times see large for- 
tunes won by some fad or fashion article, a trick toy, a style 
that catches the popular fancy and so on ; but the importance 
of the sum total of such successes is as the water in a brook 
to that in the mighty ocean. They affect social values as 
little as a pistol shot effects the success or the failure of a 
large insurance business. 

Monopolies, especially those concerning staple articles, 
give striking illustrations how thin valuations are, which seek 
to appear as freed from the constraining power of objective 
factors. 

It is at once acknowledged that a monopoly however com- 
plete and powerful even as regards staple necessities, can not 
do everything. It can not for instance at its good pleasure 
create a body of effective demand that will take off its staple 
article at any price however high, nor can it at its good 
pleasure continuously offer it at a price below a certain limit. 
Though powerful, a monopoly is still not a god. Even a 
monopoly must regard some limits. Within these limits a 
selling monopoly sets a price, a value, for the day, for the 
month, or for a season. Some or all of its product is taken 
by the effective consumers. In nothing but the surface em- 
ployment of the word can the valuations of the final con- 
sumers be said to be decisive here. It is true the buyers or 
the would-be buyers will turn every way to find substitutes 
for the monopoly's product. This means that they seek to 



IxMTEREST AS EXPLOITATION 227 

constrain or to break the monopoly by bringing external 
forces to bear upon it. They as well as the monopoly are 
under the requirements of a continuous economy. The mo- 
nopoly may, if it will, slay the golden goose, but not so a 
monopoly seeking its long-run economic welfare. Hence 
however one may writhe or struggle, always at a given 
moment exchanges are dominated by external forces, which 
then and there control the individual exchangers and their 
psychology. 

The like applies to a buyer's monopoly. Often enough it 
happens that a producer is constrained by the situation of 
his place of production and by the nature of his product to 
sell to certain classes of buyers. Often enough these buyers 
are not the final consumers of the possible final consumption 
product which they buy. I'hey can however more or less 
dictate the price paid to the seller-producer. He is con- 
strained by life demands to maintain a continuous economy. 
The buyers likewise will not slay the golden goose. Hence 
on both sides consideration must be had of the external de- 
terminants, which here are to the individual that is to hold 
on almost of the character of natural necessities. A mo- 
nopoly may be broken eventually, but for the time of its 
power it is a conquering force — not because of its mere will, 
but because of the outer forces which it wields. The psy- 
chical valuations of the individuals subject to its domination 
are at that place and moment mere surface glitter. 

The delusiveness of this consumer' value as resting upon 
merely psychological grounds is further evidenced by the 
tendency of production to rule consumption. This means 
that consumers must take what the producers offer to them. 
This is especially the case with the vast majority of persons, 
the poor, " the dependent and worthy poor," and the lower 
strata of the middle class. In brief, markets tend more 
and more to become world markets. Products for a world 
market can not be finished and furnished in a day. Let the 
producers of staples be reasonably long-headed and they de- 
termine what the consumers shall have. They estimate on 



228 ETHICS AND ECONOMICS 

various objective grounds the probable purchasing power of 
this and that class of society. For these classes they produce 
this and that grade of article. The arbitrary decisions of in- 
dividuals are thus wholly excluded from considerations. If 
times and signs look halcyon, the producers take larger risks 
and furnish a greater supply; if times look uncertain or 
stormy, the wise go slow. But in ail cases it is objective 
non-individual influences they consider. Man must eat, must 
have shelter and clothing, must have more or less of enjoy- 
ment. These are natural necessities, and that too from sea- 
son to season, from decade to decade. These things de- 
termine. Arrangements, valuations, and values of both buyers 
and sellers, lose individual significance. They are socially 
determined. 

This same idea of calculable objective elements in human 
economy is of course the basis of reservoir and storage 
systems. For example, whether it be water for the daily 
use of a city or food products from the cycles of nature in 
grain or other similar supplies, the principle is the same — 
a continuous economy contains persistent elements which 
must be reckoned on. The periodical fluctuations of a water 
source and the distribution of the water are one foundation 
layer of a water reservoir. Another layer is the steady need 
or demand for a regular supply of water. The subjective 
momentary valuation of water by an individual may vary 
from that of a man dying of thirst to that of a person in the 
throes of drowning. For a continuous economy these cases 
are insignificant. Whether each or both of the men live or 
die is of only infinitesimal force on the total situation. But 
production for world markets, or for larger markets in gen- 
eral, is an impossibility without an abundant and reliable 
water supply. A large city or an industrial establishment is 
ruled by this factor as by natural necessity. The existence and 
the properties of water determine the situation on one side. 
The constant and recurring needs of man condition it on the 
other side. Individual psychology in this case is conditioned 
by both. Valuations and values are determined by the ob- 



INTEREST AS EXPLOITATION 229 

jective relations The like applies to grain elevators and 
similar warehousing undertakings. 

There were times and economies when consumers' values 
did more plainly rule the world. In the household economies 
of various ages, in the medieval city or guild economy, pro- 
duction was largely governed by consumers' direct wants. 
The Greek and Roman households were self-sufficing. They 
produced mainly for their own consumptien; their consump- 
tion ruled their production. The like was also true of the 
guild and city economy of the middle ages. At that time, 
the households of the Roman empire were gone. New social 
arrangements and institutions had arisen. But consumption 
yet ruled production. Tools were relatively simple, were 
relatively easily controlled or duplicated. Markets were 
small ; for transportation ways and means were incapable of 
large services. Customers could oversee and determine 
within limits the character of the product they wished to 
secure. Consumers' value was here in a sense final. Yet 
even here it was not without limitations. Medieval industri- 
alism was largely ruled by two considerations; namely, a 
fairly reliable and decent living for a craftsman, and reliable 
genuine goods for consumers. The values given and paid 
were mutually conditioning and were determined by the ob- 
jective economic forces. 

It would almost seem as of the marginal utilityists in their 
desire for finalities of psychology had caught up from former 
days the consumers' value idea as showing a phenomenon 
similar to exchange psychology of to-day. With their zeal 
to discover unchangeable elements in human nature, they 
cling to the surface similarities and omit to notice the pro- 
found difference in the social psychology and social institu- 
tions. They have sought to overturn the old classic school 
of economists, but they must yet manage to throw the em- 
phasis elsewhere than upon individualistic psychology, if they 
are to explain deeply the social aspects of their problems. 
The day of consumers' values as decisive is past. Markets 
tend to become national and world markets. Productive proc- 



230 ETHICS AND ECONOMICS 

esses become longer and longer, as Boehm-Bawerk empha- 
sizes again and again ; this fact, he makes to be one of his 
pillars. Prof. Taussig tells us that much the greater part of 
the social labor of a day is put upon goods of no direct con- 
sumption value, which will in fact issue in consumption value 
only after years. It seems therefore to be trusting merely to 
the pleasant surface neatness of the complete schematizer, if 
one seeks security in the assertion of the decisiveness of the 
final consumer's valuations. It were perhaps idle to expect 
from the neat schema any penetrating explanation of social 
causes or effects. The long roundabout processes can hardly 
keep on growing in our society except upon the basis of per- 
manent calculable elements. 

This same principle of rationalized economic and social pro- 
cedure applies to the " derived " or imputed values of produc- 
tive instruments, auxiliar}'- material, and applied labor. These 
things, they tell us, derive their value from the value of the 
final consumption goods, which they together create. The 
final consumption value is the thing; until this final value be 
known, no value can be attributed to the intermediate goods; 
after the consumption value has emerged, this value is distrib- 
uted by imputation along the whole line of auxiliary instru- 
ments and possessions. Similarly with the labor employed upon 
intermediate goods. This too is at the moment of application 
truely valueless as regards consumption goods. At best, its 
real power to contribute a valuable element to the product 
is a mere hope or guess, which value can in fact be ascertained 
only after the final sale has been made. If at that time the 
guesser show himself to have guessed well, one may safely 
impute to the labor stored up in the product a real value. 
If the producer guessed ill, he may either have made un- 
expectedly large gains, or have suffered great losses. In 
neither case can the laborer complain ; for, after all, the labor 
value which he sells is determined by competition wherein 
his sale is a final consumption sale. He has really nothing 
to do with the imputed values at all. It is here of course, 
especially as regards the labor bestowed on intermediate 



INTEREST AS EXPLOITATION 231 

goods, or goods which never come to a final psychological con- 
sumption, that the utilityists think to turn the edge of Marx 
and Rodbertus, and to nullify for all time, it would seem 
from Prof. Smart, the charge of exploitation. 

One may add to the above another complexity which might 
more properly be treated in another connection, namely, the 
alternative uses of various goods. Boehm-Bawerk himself 
has dilated upon these alternative uses, and Marshall has un- 
folded himself upon the substitution of similars. " The 
alternative uses of economic goods " means that an economic 
good can be devoted to various employments. Gold may be 
made into coin or into an earring. Steel may be made into 
needles, bridges, skyscrapers, tugboats, 15-inch guns, or into 
battle ships. Thus hov/ever much the bridge-maker may 
desire some or all of the present supply of steel, his valuations 
are conditioned by the needs for 15-inch guns, battle ships, 
engines, and so on. Or in the other case, if the builder of a 
house can not get marble, he may take granite, or brick, or 
concrete, or wood ; or if he feels himself too aggrieved by the 
monopolist, he may seek a substitute for the monopoly prod- 
uct, either to avenge himself on the monopoly, or to escape 
its clutches, or perhaps to share in the gain from the useful- 
ness of the substitutionary article. From this it follows that 
the value to be placed upon any good is by no means a simple 
problem. Especially is this the case of the value "imputed" 
to any intermediate goods that may have alternative uses, 
and to the labor employed in connection with such com- 
plexly useful intermediate goods. The longer and more 
roundabout the processes of production, the more speculative 
and indeterminable do values become. 

By contrast it is entertaining to observe the attitude of 
the owners or possessors of things having only " imputed " 
values. They hardly accept this merely speculative, guess- 
like derivative value of their goods. On the contrary they 
regard their goods as having a highly real indubitable value. 
In unnumbered cases they see in their goods the fruitful 
source of thousands of final consumption values. They know 



232 ETHICS AND ECONOMICS 

quite as clearly as the final value economist, if not more so, 
that if they combine their goods having " imputed " value 
with labor having " imputed " value also, a rich stream of 
final values will issue with all the certainty of fate and 
natural law. With superb grimness they will fight to the 
last ditch for these guess-like speculative values. The hold- 
ing banker, profit-making at both ends of a " squeeze," and 
an A. T. Stewart purchasing " bankrupt's " goods, show their 
knowledge of solid values. 

The answer to this representation of imputed values, of 
alternative uses, and the explanation of the attitude of the 
owners of intermedia:te goods have already been given. 
Tersely put, the elements of the answer are : — the physical 
and chemical relations of external material nature are regular, 
reliable, they can be depended upon. The psychological re- 
lations of man to nature on which his economics depend are 
likewise subject to impersonal law; though much more com- 
plex and intricate, they too can be depended upon ; the more 
we know of them the more dependable they become. Con- 
sciousness for the most part in each of us is but a fragmentary 
distorted representation of these external regular coexist- 
ences and sequences. The complexity of the marginal utility 
economics arises from the attempt to combine harmoniously 
these million-fold individualistic and distorted representa- 
tions, without taking an adequate view of the external forces 
determining the psychology of the individual. 

Subjective Values Rest Upon Material and Psychological Necessities 

When one grasps the fact that the innumerable physical, 
chemical, electrical, thermal, and other material relations in 
outer nature represent constancies which penetrate human 
economy through every fiber, he has got hold of certain ele- 
ments which make value even in an exchange economy a 
determinable thing. When to these he has added the con- 
stants of human physiology, food, clothing, shelter, sex, he 
has additional certainties ; these make the problem more 
complex if you will but not impossible. When to these he 



INTEREST AS EXPLOITATION 233 

again adds the mass constancies of human psychology, he 
has again complicated the problem, but he has not cancelled 
the constancies. When to these he again adds social and 
institutional influences, he further entangles matters. But it 
is easy to see that it is the external constancies which are 
at work at all times, and which are the more calculable. 
These therefore are the points as it were to which the psy- 
chological and social forces are attached. It follows that 
" imputed " values, whether of material goods or of labor, 
are not so bizarre and irreducible as the utilityist would have 
us think. This consideration cuts the nerve of the Austrian 
criticism of the charge of exploitation. Reason, which is 
competent to work out roundabout processes can just as 
safely work out substantially solid evaluations of labor con- 
tributions which shall be as real as any reasonable society 
can desire. 

These forces and their constancies, external to man and also 
to the consciousness of the individual, stamp themselves upon 
the racial and individual physiology and psychology. Trans- 
figured as it were into conscious and subconscious motives, 
or into organic instinctive impulses, they constitute the lines 
along which motor and ideational activities discharge them- 
selves. The individual is constrained by them, is dependent 
upon them, however little he may be aware of his dependency 
connections. In this, he is just as a child who without re- 
flection depends upon parental all-sufficiency. The child's 
self-will may play above this support; he may even at times 
unwittingly seek to cut loose from it ; but physiological weak- 
ness and social bonds educate him to the acceptance. At a 
later date he passes on to the school of life. As man, he still 
is bound by indissoluble ties. In a few cases he becomes 
fully conscious of the many threads of his dependency but 
for the most part not so. He remains bound for all that. 
His surface psychology does not clearly represent these facts 
but the facts control him notwithstanding. The laws of 
physical nature, the physiological and social needs of a con- 
tinuous human existence, are natural necessities, even in an 



234 ETHICS AND ECONOMICS 

exchange economy. The values of an exchange economy can 
as Httle escape them, as can an aeroplane or a dirigible bal- 
loon escape the power of gravitation. 

By contrast one sees more clearly the state of mind of the 
utility psychologizer. He expects or presupposes a continu- 
ance of our society practically unchanged. The subjective 
aspects of exchange are open to all and are striking enough. 
He stresses these aspects. He slurs over the long-run almost 
subconscious governing power of the constants of nature. He 
omits to consider the influence of these constancies both in 
forming instinctive responses and in rationalizing procedure. 
He fails to consider how " imputed " values and natural con- 
stants appear in other economies. These things combined 
send him back to the individual contract idea, and thus he 
thinks that he has broken the force of socialistic criticism. 

The thought that valuations in society may be relatively 
more fixed or stable than even the normal values of our ex- 
change economy is often enough ridiculed. This ridicule 
rests largely on the ground that no social organization can 
be conceived in which differences in tastes, desires, am- 
bitions, foresight, and self-control would not occur, and hence 
different offers on different conditions would always be made 
whose acceptance could not be prevented. Otherwise ex- 
pressed, the objection says that in such a society a dead mo- 
notony and uniformity would inevitably reign. The argu- 
ment contains the standard vices: it is mostly a mere circle; 
it over-emphasizes the startling or striking particularities of 
our exchanges; it fails to note social results; it assumes a 
variety in our present society which does not exist ; it claims 
a knowledge of social results which rests not upon solid rea- 
sons but rather upon fancies and verbal contrasts. 

At bottom the argument is most circular. When it calls 
up in imagination a new economy, it uses and can use only 
the economic processes and modes of thinking characteristic 
of our own. No one can escape the psychology by and under 
which he was formed. When we seek to picture the economic 
ideas of a Crusoe, of a Roman household, of a savage tribe, 



INTEREST AS EXPLOITATION 235 

of a gentile organization, we can do so only faintly. We 
must use feelings and concepts born of our own times; in- 
evitably we saturate the imaginary society with our own 
idiosyncrasies. Finding it impossible to fit the new concept 
into the mass of subconscious transferred ideas, we straight- 
way swing to the assertion of the nonsense of the new idea. 
We judge it and reject it because of the misfit. But we 
have for the most part only projected our present concepts into 
the picture. Not finding the new idea fitting into the exist- 
ing present — otherwise it were not new — the projected 
present in the picture naturally rejects it also; it is a misfit. 
If after all we think of exchanges in a communal society ac- 
cording to the scheme of the exchanges of our day, and if 
in our day values are highly variable, quite easy is it for us 
to say that values will always be as they are with us. But 
this is merely repeating ourselves ; it is as if we were running 
round in a circle. 

We overestimate striking elements and forget the mass 
phenomena, just as in a crowd we notice the rather few tall 
persons much more readily than we notice the majority of 
average persons. But it is the average majority which con- 
stitutes the crowd; so with the mass of our exchanges and 
valuations. The dead monotony so feared for the future is 
actually existent to-day for nine-tenths of us all. This fact 
is underestimated for to-day, and is probably overestimated 
for the future, just as the variety of to-day is overestimated, 
while that of the future is probably underestimated. This 
fear of a monotonous future is in reality a pretense of know- 
ing what no one really knows. It really begs the question 
A dispassionate review of literature down the line from the 
Vedic hymns or even fainter traces in the fragments from 
savages and barbarians will hardly show that life failed to 
prove to be a somewhat interesting matter to all our fore- 
bears. 

The argument fails to note social bearings of any proposed 
change. Now the social spirit itself must change in part 
before a new idea or practice can get entrance at all. Forth- 



236 ETHICS AND ECONOMICS 

with, new results work themselves out after the new idea 
has entered. Along with these changes economic and other- 
wise goes a change in the general psychology. This is the 
evidence of history. Hence the social result of the new 
thought or process may be quite other than any one would 
predict. The social stagnation which the argument boldly 
predicts may never occur. The argument rather appears to 
expect that a new force injected into society shall leave un- 
changed the psychology of that society ; that is, it expects to 
maintain in a new society the modes of thinking and feeling 
appropriate to the old. This is mere beggary, and is con- 
tradicted by all history. 

On the whole, one may safely say that the forces raining 
in upon a man are so extremely numerous, that any prediction 
of a dead monotony and of social stagnation resulting in the 
future from a relatively fixed labor value is worth not more 
than an indulgent smile. 

It all seems clear enough. The utility schematizers deal 
with an intricate and much-tangled skein of interrelated phe- 
nomena. They must take some one point of departure, if 
they are to handle the matter at all. This, they take in their 
final consumption value of an economic good. They unfold 
the skein as well as they can linearly. Everything in their 
individualistic psychology passes through this point, and is 
causally referred to it. Usually the origin and the relativity 
of the starting point are not dwelt upon. The matter is 
already complex enough; hence a critical revaluation and in- 
tegration are not gone through with. What with dropping 
limitations here and limitations there, the presented whole be- 
com.es as much a distortion as if one were to take the picture 
as the real, or were to regard a skeleton as the replica of the 
living man. It is largely thus by cutting a psychology off 
from its social foundations, and a psychological economics 
from its historical and social relations, that one gets such 
inept and circular refutations of Rodbertus and Marx as are 
often found. Indeed the ground fallacy of the greater part 
of the " refutations of socialism " consists of just this psy- 



INTEREST AS EXPLOITATION 237 

chology circle overworked. Look always for this circle, de- 
mand rational modesty concerning remote schematic details, 
and nine-tenths of these " refutation " vanish into thin air. 

In this connection one may refer again (vd. p. 95) to Prof. 
Moore's " Lav/s of Wages." From this book one can readily 
judge that it would not at all surpass human power to fix 
with certainty schedules of values sufficient for reasonable 
administrative purposes; wage-scales among the rest. A sup- 
ply of adequate statistics, treatment by appropriate mathe- 
matical methods, and the thing is done; revisions from time to 
time, as data and skill to interpret increase. Prof. Moore's 
case of the French coal industry is much in point. One of 
the most significant things about this case is the comparative 
steadiness of the relation between the mean daily wage and 
the value of the mean daily output at the mines. If an agree- 
ment so close as that given can be had, where all the aber- 
rations of our theoretical individualism have play, it seems 
reasonable that still closer relations may be made out. This 
treatment, applied to a number of staples and necessities, 
could be made to yield " standard numbers," useful, not 
merely for theoretical explanations of the past, but also for 
directing future policies in a different spirit from that of the 
present. The problem is difficult but not impossible. The 
present method is persistent bungling by self-interested legis- 
lative empirics. 

The preceding discussion should have made clear enough 
the general illusory character of the answer of the utility 
school to the charge of exploitation. In step after step the 
utilityist in his assumptions annihilates exploitation possi- 
bilities. The contract freedom and equality of the empty- 
handed over against the captain of industry abolish much; 
the surface psychology of exchange values does the same; 
the obscuration of constants, the omission of reason, the com- 
plexity of values from alternative uses and so on, all these 
things lead easily to the view that in theory there can be no 
exploitation. Only, — the historical facts remain. It were 
perhaps almost as easy to show that the slave who had sold 



238 ETHICS AND ECONOMICS 

himself voluntarily (?) into slavery, suffered no exploitation. 
In schematizing, take heed to your presuppositions. With 
care and dexterity, you can build high, up from the soil into 
the zephyrs of Spain, Demand of the modern utility eco- 
nomist to see the objective foundations of their structures, 
and their castles straightway begin to crumble. 
Restatement 

The rather fundaniental difference between the two modes 
of thought makes it desirable to repeat. Value, use value 
and exchange value, certainly mirror themselves in conscious- 
ness, whether the values concern staple articles or fads and 
fancies, whether they are those of rationalized demands or 
of arbitrary whims. What is certain is that the veriest whim 
is conditioned externally, and that fads and fancies are but 
as bubbles on the surface of the great deep. The exploits 
of even a Bavarian king are insignificant except as they are 
upheld and put through by outer forces. Thus then the ex- 
ternal powers are in the long run the ultimate causal factors. 
These constitute the objectification of the subjective phe- 
nomena; or perhaps better, the subjective phenomena for the 
most part merely envisage the objective forces. According 
to this, subjective value is substantially the mental represen- 
tation or image of exterior relations. There is no need to 
translate this proposition into either human or divine mystic- 
ism. One can of course plunge into the depths (or shallows) 
of metaphysics, but no metaphysics is meant here. Simply 
this ; — logic-chopping, hair-splitting, abstract schemata have 
never yet cancelled man's need of physical sustenance. Food 
at one moment is external to him, at another moment it is in- 
ternal, and at a still later moment, "disjecta membra" are 
again external. Block this process and the man dies. A natural 
necessity is upon him to maintain this transmutation of the 
external through the internal into the external, if he is to 
continue. This is merely illustrative of every phase of his 
life. Every aspect of his existence is conditioned now simply 
and directly, now complexly and indirectly, by external re- 
lations. The frenzy or vapor of the surfeited debauchee, the 



INTEREST AS EXPLOITATION 239 

last clutch at a straw by a drowning man, the empty drivel 
of the foolish or the insane, and the calm rationality of a 
thoughtful man, are each of them conditioned by external re- 
lations and in the long run by economic forces. Whim 
valuations presuppose a complete biologic and economic his- 
tory and evolution. Whim values arising from exchange in- 
volve the whole social structure. Normal market values for 
the day and the hour, and the long-run values, the long-time 
averages of daily market values if you somewhat erro- 
neously will, these also have their external prerequisites. 
Each case here represents a different alignment and super- 
position of forces. These different groupings of forces rep- 
resent and constitute the objective side of values as mirrored 
in the mind. 

The situation is this : — Man with a multitude of desires ; 
external objects having qualities fitted to satisfy those de- 
sires; conditions governing access to those material objects; 
conditions governing the renewal of the economic supplies. 
All these pass more or less clearly across the stage of man's 
consciousness. He knows more or less clearly the useful 
properties of the external objects. He is more or less aware 
of the conditions governing his access to the objects. In his 
actions he may seem to make a purely personal choice. In 
fact he is constrained at greater or less removes by forces 
running from blind and overmastering physiological neces- 
sity up to those of seeming wantonness of choice, by short- 
run or by long-run considerations of an objective character. 
With one man the fear of want in his grandchildren may be 
as effective as physical starvation with another. The action 
of the former is as little free from external forces as the chess 
player's decision to accept mate in five moves springs from 
purely subjective considerations. The rules of the game con- 
trol in one case, the rules of life in the other. 

Use values then are in a sense objective, exchange values 
rest likewise upon external qualities and the conditions of 
access to the things carrying the qualities. The individual in 
the overwhelming majority of cases merely reflects in his 



240 ETHICS AND ECONOMICS 

valuations these external conditions. Now the really im- 
portant point socially in this matter is the mode and the con- 
ditions of access to the goods, and the mode and the con- 
ditions of the renewal of the supply. In a certain sense the 
power of the external object to satisfy a want very often is 
of the character of a natural necessity. Food, clothing, and 
so on are illustrations. The modes of access and of renewal 
are almost wholly a matter of social regulation. Social bonds 
therefore are creators of value; in the sense also that they 
even determine the psychology of the multitude, and hence, 
popular tastes, desires, and demands. Exchange relations, ex- 
change values, are thus in an average regular economy almost 
wholly a creation of society. These social values are the 
mighty ocean upon whose surface, whim and fad values are 
as bubbles of foam, shimmering, vagrant, insignificant. 

Since values, even exchange values, are fundamentally so- 
cial in origin and are bound to objective facts and realities, it 
follows that the only safe and scientific measures of them 
must be objective impersonal relations. You can for scien- 
tific purposes as safely measure value subjectively as you can 
for science take temperatures from the bodily feelings of 
heat and cold. In both value and temperature you have 
objective facts mirrored in consciousness. In both cases you 
must take to the objective for your measures. Thus the 
marginal utilityist can not remain closed up in his compart- 
ment, subjective value ; he must come out into the open forum 
of objective relations. His attempt to screen or cover over 
with subjective drapery the objective facts of exploitation 
in interest-getting is in vain. The matter has to be brought 
to the touch of the external social facts. 

Finally comes the ever-pressing necessity of a renewal of 
the supply of desire-satisfying goods. Here labor and tools 
combined under social regulations stand forth, necessity cours- 
ing through social molds. Then again appears the fourfold 
division, landholders, capitalists, enterprizers, and laborers. 
Since even present values are dominated by natural and social 
relations, evidently social conventions can conceivably estab- 



INTEREST AS EXPLOITATION 241 

lish with deliberation social values in connection with nature's 
constants. A labor state is at least conceivable. In such a 
state the marginal utility doctrine would be shorn of many 
of its rococo and freakish adornments. It would not be 
necessary to find a formula of value as easily applicable to 
the systematic beggar, as to the worker, and to the abundantly 
rich. In conformity with the change in social relations would 
supervene a more or less complete change in psychological 
valuations. In such a state values would be conspicuously 
social and the measure of values would be conspicuously ex- 
ternal. Conceivably, social results might be hugely different 
from what we now see. Conceivably, do-nothing interest- 
getters would not exist. Though social labor might be ex- 
ploited, that is, be wasted or applied to foolish purposes, yet 
the exploitation would be social, it would not be the exploita- 
tion of one member of the state by another member of the 
same state, with the consequent formation of classes of ex- 
ploited and exploiters. This makes all the difference in the 
world. In short, just as economic history shows the transi- 
toriness of past social forms, so analysis and constructive 
imagination show the possible changeability of our present 
system. 

The utility doctrine seems to be misconceived, at least by 
some of its users. The psychological school of economics 
can not escape the dominance of objective forces. Whatever 
fraction of initiative remains to some few individuals, the 
mighty multitude are molded by what to them is outer ne- 
cessity. There stand the objective facts. Economic goods 
come only from nature molded and directed by human labor. 
These goods have properties which satisfy human needs. 
Nature at once attacks these goods ; as future passes into the 
present, they decay. Interest with us means a portion of these 
goods. Interest-getters do absolutely nothing towards their 
creation or the guarding of them from decay. Access to the 
goods both for workers and for non-workers rests upon in- 
stitutions. The social mode and the conditions of renewing the 
supply are determined by social regulations. Some labor and 



242 ETHICS AND ECONOMICS 

reap ; some labor and do not reap ; some do not labor and yet 
reap. These latter are exploitation. A part of this exploita- 
tion is interest. To be able to reap socially where one has 
not sown is the result of social conventions. Interest then 
in this sense is certainly not " an ordinance of nature or a 
decree of fate." However justified at various times on various 
grounds, a period may conceivably come wherein interest- 
getting may be found neither so desirable, nor so morally 
justifiable as bourgeois economy would represent it to be. 

Finally concerning the ethical aspect of the whole subject 
as here discussed, one sees clearly enough the economic foun- 
dation of the age-long debate upon interest. In the household 
economies of Greece and Rome and in the guild and city econ- 
omy of the middle ages, the phenomenon of interest as we 
know it was unknown. The exploitation was direct in the 
case of slavery and serfdom. Outside of these, labor was 
too manifestly the significant element. Interest, appearing in 
connection with trade or commerce, and these being so notice- 
ably tied to chicanery, deception, plundering and piracy, or else 
in connection with the consumer's necessities, or spendthrift 
undertakings, — interest or usury was socially condemned. 
The mode of production and distribution controlled the social 
concept. Trade and commerce everywhere tended so far as 
possible to break through the barrier. Ethical conceptions 
in this matter underwent a fermentation process. Change in 
transportation and production, tools and processes, brought 
about a commercialization of the western world. The ethical 
objection to interest dropped into nothingness. The de- 
velopment of machinery and of immense transportation sys- 
tems has destroyed the possibility of individuality for the 
masses under our present system ; on the other hand, it has 
made conspicuous the vast and intricate relations of depend- 
ency upon which society rests. This means the appreciation 
of the function of labor. A new training, the necessary out- 
come of complex machinery, is a new instructor; labor must 
be intelligent, and it must be combined to get out the prod- 
uct. This means the evolution of a new social psychology, 



INTEREST AS EXPLOITATION 243 

new psychical values in the laborers' heads, new power eco- 
nomic and otherwise in their hands, new lines of " specific 
product " and proportional divisions among laborers, enter- 
prizers and capitalists, the disappearance of the old " absolute 
social justice" "desirable and morally justifiable," and the 
emergence of a new. Hence later, new schemata and systems 
of labor ethics arising from the changed and changing eco- 
nomics. In this matter, plainly enough, the entire ethics 
with all its side developments is but transfigured economics. 



CHAPTER VI 

ECONOMICS IN KANT'S ETHICS 

Kant's Person and Influence; "Pure Reason" Ethics; General 
Reply; Economic Basis op Kant's Ethics. — Kants " Metaphysic 
OF Morals": I. Good Will Acts from Duty; II. Morality Rests 
on Maxim op Will; III. Duty Is Respect for Law; IV. Law Is 
Universal; V. Transition to Metaphysic; VI. Morality Presup- 
poses Freedom; VII. "Pure Reason" Ethics and Real Life; 
VIII. "Critique of Practical Reason"; IX. "God, Freedom, and 
Immortality"; X. "Principles op Jurisprudence." — Origin of 
Ethical Finalities: Objective and Subjective Worlds; Sciences 
Are Groups of Kindred Facts Plus Explanatory Formulas; Simi- 
larly, Philosophy or Metaphysics. — Real Necessity or Depend- 
able Regularities Confounded with Formal Necessity or Con- 
sistency: Causality; Mathematical Axioms; Space; Logic. — Failure 
OP General Apeiorism; Kant's Ethical Apeiorism Impossible; 
Other Ethical Systems; Religious Finalities. 

It would be hard to find any moralist whose ethics appear 
more abstract or more formal than the system of the famous 
founder of the "Critical Philosophy," Immanuel Kant. Though 
his doctrine of morals was never so revolutionary as his specu- 
lative philosophy, departing in fact from customary ethics only 
by its intenser abstractness, it is still referred to with much 
deference, and many ethical writers appear to find a great 
support to their views, if they can only quote Kant's words 
apparently in their favor. Just because of the abstractness 
and the formality of Kant's ethical system, the wish arises to 
touch on it in connection with its economics, or with economics 
in general. If ethics be, as said, largely a matter of transfigured 
economics, then Kant himself amid all his abstractions should 
betray this fact. At all events, the following makes a slight 
essay into his territory in search of economic presuppositions 
or interpretations. 

244 



ECONOMICS IN KANT'S ETHICS 245 

Kant was himself the quietest and most methodical of mor- 
tals ; so regular in his habits, that persons set their timepieces 
by his daily walks ; of delicate health and physique, he passed 
beyond the allotted three score and ten ; only about five feet 
in height, he gave birth tO' thoughts which overturned the 
speculative world ; never more than fifty miles from his native 
town, he explored the stellar universe, developed the nebular 
hypothesis usually ascribed to Laplace, studied, thought, wrote, 
and became so much the fountain head of modern philosophy 
that modern speculative philosophy is said to begin with Kant 
and tO' be incomprehensible without a knowledge of him. 

PURE REASON ; APRIORISM 

Kant is the high priest of "pure reason." His ethics are 
the ethics of "pure reason". One will get the signification of 
"pure reason" most quickly and easily by conceiving what is 
meant by a disembodied spirit, by angel in the theological sense. 
The schoolmen depicted many dififerent species of angels, and 
for Kant, man on his spiritual side is of the same general class 
of beings ; that is, man is to be conceived of as essentially a 
kind of substantial spirit, in this life affixed to or in a sensitive 
body ; and after this life persisting but devoid at least of such 
a material organism as that now possessed, whatever be the 
nature of its body in the future world. In short a great gulf 
is fixed between matter and spirit. "Pure reason" is thai 
independent rational spiritual essence. 

Knowledge, principles, feelings, volitions, springing from or 
expressive of the nature or constitution of the spiritual side 
of man are "pure," rational, a priori: knowledge, principles, 
and so on arising because of its contact with the body and 
from the influence of the body are empirical, contingent, a 
posteriori. If angels or other rational beings exist in the uni- 
verse, these pure a priori rational ideas or principles, feelings, 
and volitions have a validity for them, a validity quite inde- 
pendent of man's special physiological and physical conditions 
and surroundings. God himself is just as subject to these 
pure rational laws as is man himself. Since man is distin- 



246 ETHICS AND ECONOMICS 

guished from other earthly organized beings by the quality of 
"pure reason," Kant's moral philosophy is thus addressed to 
man as devoid of bodily passions, appetites, or necessities. So 
far as a man's moral judgments are influenced by bodily wants, 
necessities, passions, desires, feelings, the purity of his ethical 
judgment is sullied or corrupted. The mother's joy over the 
babe at her breast may be as immoral as the gloating of a 
lecher over the deceiving of a trusting heart, or as wicked 
as a tyrant's pleasure in the cries of some helpless ofifender 
tortured in his presence. Since for Kant moral judgments are 
to have validity throughout the entire universe of rational 
beings, the bodily relations are beyond consideration. Kant's 
entire critical philosophy is built upon this divorce of soul and 
body; his great quest is to ascertain as far as possible exactly 
what elements of knowledge, belief, feeling, and practice are 
traceable to the mind's native endowment, wholly apart from 
bodily relations. It were just as if the chemist who had never 
separated from a compound a certain supposed element were 
to try to state what qualities or characteristics that element 
would possess, could it at last be actually isolated. In both 
cases the problems seem entirely proper, provided one have 
plausible enough grounds for accepting the idea that there is 
actually a composition. Assuming here this point, then the 
qualities and principles w^hich the mind from its own nature 
brings into the combination are called pure, a priori. All knowl- 
edge and principles resulting from the influence of the body 
and of the external world upon the mind are empirical, expe- 
riential, contingent, a posteriori. The like of course applies to 
ethics in general. 

Or expressing the distinction, not metaphysically as above, 
but rather in the field of explanations, a priori principles are 
such as are indispensable to any and all explanations ; for 
example, the laws of logic: or they are inevitable or necessary 
presuppositions, either of experience in general, or of this or 
that particular kind of experience ; for example, when a re- 
flective person speaks of thoughts, feelings, and beliefs as his 
own, Kant indicates from this that some sort of unifying ele- 



ECONOMICS IN KANT'S ETHICS 247 

merit, an ego, or a kind of personality must be presupposed in 
order that any such experience or declaration may be had or 
made : space is a necessity of mathematical knowledge ; causal- 
ity is a necessity, if physical science is to exist. 

Or again, this same thing from another side ; given such 
and such ideas, principles, and definitions as somehow known, 
then all conclusions from these data are conclusions a priori. 
Repeatedly Kant says experience can not be had apart from 
such a priori principles ; or at least, science apart from such 
ideas is a vain and empty thing, since then it would lack all 
certainty and universality. 

GENERAL CRITICAL REPLY 

Often enough this exaltation of "pure reason" and its 
products has been more or less turned against Kant. Every 
new-born babe shows in the course of its mental and physical 
growth that man's knowledge at all events begins with expe- 
rience. The child's acquisitions are nothing if not of empirical 
origin. If in time the child ever comes to manifest "pure 
reason," evidently the faculty glimmers but faintly amid the 
thronging elements of the sensuous bodily life. Accordingly 
distinctions made by it in this sensuous life must be mostly 
experimental. Indeed the "pure reason" conception or activity 
is itself a distinction made only in connection with and upon 
a background of sleepless nervous sensibility. Now it is diffi- 
cult to see how Kant is ever to be sure that any manifestation 
or exercise of human intelligence can get completely clear of 
the bodily organism in which the intelligence is at present 
immersed. However mature the man may be, physiology, 
pathology, chemical, or in general, biological facts would indi- 
cate that there is no mental activity which is not correlated 
with brain or nervous changes afifecting directly or indirectly 
the entire organism. A little poison in the blood will throw 
into disorder the finest "pure reason" faculty in the human 
race. Finger pressure on the carotid arteries in the neck will 
dissolve into unconsciousness the abstractest philosophic flight. 
That the body-mind machine works smoothly most of the time 



248 ETHICS AND ECONOMICS 

easily leads to an illusion about purely mental activity, to the 
belief that the bodily contribution and influence may be wholly 
negligible or even occasionally non-existent. But this idea 
hardly squares with hosts of physiological facts. Kant's "pure 
reason" as achieving any action apart from the body seems a 
mere leap. The keen physiologic-psychology of to-day has dis- 
placed the ignorance of former times. Body and soul are tied 
much more tightly together than ever before. The loose con- 
nection of the days of ghosts is unacceptable. 

The belief in fairies, celestial hierarchies, angelic visitants 
of all literatures, superstitions, and religions, in which poets, 
mystics, schoolmen have revelled, proves only the transfigura- 
tion of "the will to live," when it enters the light of conscious- 
ness. Swedenborg described the inhabitants of Mercury, 
Venus, Mars, and so on, but his visions make no mention of 
the dwellers on Uranus or Neptune; these planets not yet 
having been discovered, Swedenborg's revelations did not an- 
ticipate any of our present knowledge of them. Hardly will 
anyone say that he knows with verifiable certitude whether 
"pure reason," disembodied spirits, or angels of any kind really 
exist or not. No one seems as yet tO' have demonstrated under 
objective impersonal tests their independent reality. To this 
day after thousands of years of speculative endeavors, of emo- 
tional longings, of literary enthusiasms, their existence remains 
entirely problematical. The numberless cases of disordered 
minds claiming communication with the other world, the mani- 
fest bodily disturbances accompanying exalted states of relig- 
ious experience, the impossibility of extracting any concord- 
ant results from the proclaimed revelations, the uncounted 
instances of falsified communications and pretensions, the 
absence of al! possibility of verification processes, the ease 
with which many asserted revelations are explicable as misin- 
terpreted real experiences, — all this removes the matter from 
the regions of sane discussion. 

One feels strongly enough, for the most part, the concrete 
man behind these abstract "pure reason" deliverances. From a 
variety of causes, principles of knowledge seem to bespeak 



ECONOMICS IN KANT'S ETHICS 249 

for reason a kind of independence wholly separate from the 
body; more sharply viewed, even these extremely abstract and 
general principles come back to sense experience and sense 
measurement. But when one tries to speak of a priori feelings, 
a priori volitions and the like, that is, those independent of, 
and antecedent to all bodily experiences, one immediately be- 
comes aware that he is perilously near to nonsense. For the 
most part at least, feehngs and volitions are so clearly related 
to bodily states and effects that in such cases the severance of 
mind and body seems a rather impossible matter, and that the 
more so, the more practiced one is in noting such relations. 
The psychology of to-day with its emphasis upon biological and 
evolutionary development connects so-called pure thought or 
ideation too closely with motor impulses and muscular activity 
to permit the former easy divorce of mind and body. 

In this matter of the angel possibility or the "pure reason" 
in man, and generally in his entire philosophizing, Kant made 
use of scientific abstraction. He accepted certain elements of 
experience as undisputed; among these seemingly indisputable 
facts is the age-long assertion of the disparateness of soul and 
body; to these elements or facts, he added further analyses, 
distinctions, and constructions ; grasping them firmly and hold- 
ing them fixed, he proceeded to exhaust more or less fully the 
possibiHties impHed or contained within them and their rela- 
tions. The process is precisely that of science. It is both 
allowable and necessary to abstract and to generalize, in order 
to manage the complexity of nature and its problems. All 
science is at once the result and the justification of this course. 
The fruits of the process are its test. The history of inductive 
science is likewise the proof that these abstractions must 
always come back to the experiences of concrete life. The 
chameleon character of philosophical and metaphysical specu- 
lation is, on the other side, proof of the desirability of some 
sort of objective controls in speculation. 

What is done in this case and in all science theories is to 
classify, and to place into separate compartments, as it were, 
facts or aspects of experience. Abstractions are made ; men- 



250 ETHICS AND ECONOMICS 

tal constructions or hypotheses are set up ; definitions, rules, 
and processes of treatment are elaborated; conclusions are 
drawn from the combination. Kant's "pure reason" construct 
is exactly like any science construct or hypothesis. But science 
has advantages forever denied to Kant's "pure reason" figment. 
Science demands verification ; it brings its conclusions to ob- 
jective impersonal tests ; its compartment walls are no longer 
rigid. The breakdown of science theories has again and again 
demonstrated that its cell walls shall not be absolutely fixed; 
they are only temporary structures. What a wilderness ot 
mere words science would be apart from verification require- 
ments can easily be seen by any one who will read some 
scholastic Aristotelian. The jangling of philosophic and relig- 
ious sects is a similar phenomenon. The vagaries of science 
when uncontrolled by objective tests foreshadow how little 
dependence is to be put upon any hypotheses or explanations 
which carry one into a field where all possibility of objective 
verification is cut off from the very outset. Hence there are 
no solid checks for speculative metaphysics and theologies. 
Kant of course, being a man of profound scientific knowledge, 
tried mightily to^ find and to apply adequate guards, but his 
tests can at best secure only consistency ; their plasticity under 
his hands is now manifest in his own works. As it were, 
metaphysical compartments have impenetrable walls ; no tests 
save only those of general experience exist to shake their 
fixity. 

The general doctrine of organic and inorganic evolution has 
largely contributed to the destruction of this static compart- 
mentalization. Much more than was the case in the past, ex- 
planations nowadays seek the genetic view-point, that is, the 
present aspect of things is regarded as but a transition point 
between what was and what will be. Nothing is permanently 
fixed. The complexity of the universe is so great that no 
concrete situation is ever likely to be exactly duplicated. 
Guiding principles themselves in science exhibit only a relative 
stability. We read them from the past and into the future, and 
when pinned by a failure so to apply them as to reach predicted 



ECONOMICS IN KANT'S ETHICS 251 

results, we reduce the formulas to a set of general terms, vague 

and indeterminate, in order that we may save our faces from 

confusion and leave ourselves a loophole through which to 

escape. In short often enough we are the prey of our own 

abstractions. 

Economic Basis of Karit' s Thinking 

The general economic conception at the basis of Kant's 
thinking is the individualism of the advanced thinker in a 
more or less absolute, kingly state, amid feudal privileges, and 
strong ecclesiastic power. The preservation of monarchical or 
aristocratic powers and privileges, the weighty influence of 
ecclesiastical organs, whether that of the papacy or that of the 
state church, the increasing but not yet developed energy of 
physical science, the growing strength of commercial and in- 
dustrial economics, all these influences show themselves in 
Kant's thinking, and necessarily color and determine both the 
form and the matter of his conclusions. It was the day of the 
" Encyclopedia," " social contract," and " the rights of man." 
Kant himself fully sympathized with these ideas so far as they 
did not cut into his pietistic nature. It was but natural that 
he could not escape the rigid metaphysical and theological con- 
ceptions trailing down from the middle ages, though he burst 
them more or less asunder in many directions. Had the per- 
vasiveness of evolution as now taught been felt by him, it is 
not difficult to imagine that his account of ethical philosophy 
had been different. There had been likely enough at least a 
clearer indication of the schematic character of his problems 
and their solution. Be that as it may, Kant sees things in the 
light of economic individualism, an attitude in many ways quite 
harmonious with the scientific temper of individual thinkers. 
Since an appreciation of the difference of spirit between in- 
dividualistic and social concepts must lead to a perception of 
the relative character of solutions resting upon these different 
bases, and since the theory of evolution had not then mas- 
tered all thinking in the way it now does, hence for Kant the 
social origin of many of our concepts did not stand forth 
clearly, which means almost of necessity that the individual- 



252 ETHICS AND ECONOMICS 

istic side of all philosophy would unconsciously receive from 
him more stress than is current in present-day thinking. 

Into his "pure reason" polity, his kingdom of rational beings 
the universe over, Kant imports this same individualism to- 
gether with a physics and a physiology, known nowhere in the 
stellar universe so far as man is concerned. His pure rationals 
must at least be presumed to continue in existence, to have 
some way of communicating with one another, some mode of 
influencing one another. Now continuance of existence for 
living beings apart from food, clothing, and shelter is unknown ; 
and apart from physics and physiology, means and modes of 
communicating with rational beings and of influencing them 
are similarly unknown. Kant gives us no details about these 
ultra-earthly beings and their intercommunications. 

It is of course a possible problem to construct an ethics 
for such conjectural beings, but we have no right to represent 
this problem ethics as real ethics for man. Exactly this is 
what Kant does. "Moral philosophy does not borrow the 
least thing from the knowledge of man himself (Anthropology) 
but gives laws a priori to him as a rational being. * * * 
the basis of obligation must not be sought in the nature of 
man or in the circumstances in the world in which he is 
placed, but a priori simply in the conceptions of pure reason. 
* * * That which mingles these pure principles with the 
empirical does not deserve the name of philosophy ; * * * 
much less does it deserve that of moral philosoph)'^, since by 
this confusion it even spoils the purity of morals themselves 
and counteracts its own end. * * * Obligation as a 
notion from empirical sources is anything but moral." 
(Preface, "Metaphysic of Morals.") If neither the nature 
of man (other than the pure reason part of him) nor the cir- 
cumstances in the world in which he is placed can say or do 
aught concerning the basis of obhgation, concrete ethics are 
annihilated at the outset. Economic realities are superfluous ; 
consequences or results outside of pure reason limits are 
negligible, rather must be wholly excluded from consideration. 
Physical needs, physiological necessities, social connections, 



ECONOMICS IN KANT'S ETHICS 253 

none of these things touches the "basis of obHgation" for real 
human beings. Food, clothing, shelter, even physical life itself 
are of no moment in ethical matters, and can not have any 
determining power in "moral philosophy." Such "ethics" are 
merely academic, practice-problems ethics ; to call them real, 
or human ethics is to abuse ordinary language. To transfer 
them without adequate limitations into actual life is to contra- 
dict the fundamental idea of morality. Confusion arises, and 
without doubt "cases of conscience" spring up, often ruinous 
to healthful mental and social activity. The miseries caused by 
such "cases of conscience," issuing from the conflict of immobile 
absolute beliefs, especially those of an ethical or religious 
character, with those resulting from advancing science and 
economic social change, are incalculable in number. Kant's 
rigid abstractions have added weight to the burden. 

Grant however that Kant does secure his "pure reason" 
moral philosophy, he has the problem of getting it back to the 
earth in a workable condition. But before considering this 
part of Kant's problem, it will perhaps be not unpleasant to 
observe his pages in order to see whether or not the real world 
with its economics, its concrete ethics, its causes and results, 
does not constantly peer out at us through his abstractions, 
and whether the content and the drivers of his ethics are not 
after all the passionate men and women of this world. Since 
neither Kant, nor any one else can give movement or evolution 
to an abstract system save only by slipping back again and 
again into the real world, we shall also append along the course 
interpretations of Kant's formulas, more in line with existing 
evolutionary ethics. 

THE GOOD WILL ACTS FROM DUTY 

Kant opens his "Fundamental Principles of the Metaphysic 
of Morals" (Abbott's "Kant's Theory of Ethics," 4th ed. 
Longmans) with the oft-quoted sentence : "Nothing can possi- 
bly be conceived in the world, or even out of it, which can be 
called good without qualification except a Good Will." In 
effect he continues : 'Intelligence, wit, judgment, courage, 



254 ETHICS AND ECONOMICS 

resolution, perseverance are undoubtedly good and desirable in 
many respects, but they may be bad and mischievous, if the 
will which is to make use of them is not good. It is the same 
with gifts of fortune; — power, riches, honor, even health, well- 
being, contentment, need the good will to correct and rectify 
them.' "The sight of a being who is not adorned with a single 
feature of a pure and good will, enjoying unbroken prosperity, 
can never give pleasure to an impartial rational spectator." 
'There are some quahties of service tO' this good will as facili- 
tating its action, and as constituting even part of the intrinsic 
worth of a person, such as moderation in the affections and 
passions, self-control, and calm deliberation, which yet are not 
•good without qualification; for without a good will they may 
become extremely bad ; the coolness of a villain not only makes 
him far more dangerous, but also directly makes him more 
abominable in our eyes than he would have been without it.' 

"A good will is not good because of what it performs or ef- 
fects, not by its aptness for the attainment of some proposed end, 
but simply by virtue of the volition ; that is, it is good in itself, 
and considered by itself is to be esteemed much higher than 
all that can be brought about by it in favor of any inclination, 
nay, even of the sum total of all inclinations." 'Even though it 
should lack power to accomplish with all its efforts some set 
purpose, it would still be like a jewel whose whole value was in 
itself.' "Its usefulness or fruitlessness can neither add to nor 
take away anything from this value." * * * "There is however 
something so strange in this idea of the absolute value of the 
mere will, in which no account is taken of its utility," 'that the 
idea may seem a mere high-flown fancy.' Kant next comparing 
reason and instinct as safe and certain guides for the attain- 
ment of the happiness, welfare, and conservation of a being 
having reason and will, gives the palm to instinct, — [Evolu- 
tion doctrines would quite destroy this Kantian interpretation] , 
and concludes that nature's aim was to produce' "a will not 
merely good as means to something else, but good in itself, 
for which, reason was absolutely necessary" * * * "Reason rec- 
ognizes the establishment of a good will as its highest practical 



ECONOMICS IN KANT'S ETHICS 255 

distinction, and in attaining this purpose is capable only of a 
satisfaction of its own proper kind, namely that from the at- 
tainment of an end, which end again is determined by reason 
only, notwithstanding that this may involve many a disappoint- 
ment to the ends of inclination." 

Kant next has ''to develop the notion of a will which de- 
serves to be highly esteemed for itself, and is good without 
a view to anything further, a notion which exists already in the 
sound natural understanding requiring rather tO' be cleared up 
than to be taught, and which in estimating the value of our 
actions, always takes the first place and constitutes the condi- 
tion of all the rest." For this purpose he makes use of the 
notion of duty. 'He omits all actions contrary to duty, all 
those which though conforming with duty may yet be prompted 
by or performed from other reasons, from inclination or from 
selfish views. Thus though it is the duty of a dealer to take 
no advantage of an inexperienced trader, a prudent dealer will 
not overcharge even a child. Still though he thus serves his 
traders honestly, he may do' so from only prudential motives, 
not for the sake of honesty itself, not even from inclinations 
to assist others, but only from selfish views and ends. To pre- 
serve one's life is a duty. If this be done because of the strong 
inclination to self-preservation, all maxims thereto resting upon 
this inclination have no moral import. If however one in whom 
adversity and sorrow have destroyed all relish of life, should 
yet in spite of wishing for death preserve his life, not from 
fear or from inclination but from duty, then his maxim has 
moral worth. The like is true of beneficence as a duty. Such 
an action may spring from the mere pleasure of spreading 
joy and happiness around one, or from sentiments of public 
utility, but if done so it has no moral worth and is not to be 
esteemed. On the contrary one who performs such acts, how- 
ever cold and indifferent he may be to the sufferings of others, 
however immersed in his own cares and sorrows, if he does 
them from duty, his moral worth so far is incomparably high.' 

"To secure one's own happiness is a duty, at least indi- 
rectly; for discontent with one's condition, under a pressure 



256 ETHICS AND ECONOMICS 

of many anxieties, and amid unsatisfied wants might easily be- 
come a great temptatio7i to transgressi07i of duty.'" 'Here of course 
all men have the strongest and most intimate inclination to 
happiness, for happiness in fact combines all inclinations 
in one total. The precept to secure one's own happiness often 
greatly interferes with some inclinations, and yet a man can 
not form any definite and certain conception of the sum of sat- 
isfaction of all of them which is called happiness. Whatever 
the conflicts and difficulties thus arising there yet remains the 
law, namely that one should promote his own happiness not 
from incHnation but from duty ; by this, would his conduct 
first acquire true moral worth.' 'To love our neighbor even 
our enemy, is of the same nature.' "Love as an affection can 
not be commanded, but beneficence for duty's sake may." 
* * * "This is practical love not pathological, a love which is 
seated in the will and not in the propensions of sense, in prin- 
ciples of action, and not of tender sympathy." Hence from all 
this — ' that an action have moral worth it must be done not 
from inclination but from duty.' 

From the preceding direct quotations and summaries of 
Kant's first position, that moral worth springs from the per- 
formance of actions from duty, one may find matter containing 
the gist of a criticism of Kant so far as concerns present pur- 
poses. 

(a) One sees at the outset how far removed one is from 
an ethical content concerning angels or rational beings devoid 
as such of economic, physical, and other earthly necessities. 
This of course is here to be expected since Kant is at this point 
proceeding upward from common rational knowledge of moral- 
ity to the philosophical. But the same examples and treat- 
ment recur in his abstract forms, and in the end, when he 
descends from the ultimate heights, he is compelled to give 
movements to his abstractions, by taking up here and there 
hints, bits, fragments from these concrete ethics of earth, as 
the needs of progress and development of his system arise. 

(b) One further sees Kant's schematic rigidity and ab- 
stractness : — a "good without qualification," "absolutely good," 



ECONOMICS IN KANT'S ETHICS 257 

"no account taken of utility or of inclination," "good in itself," 
"good not as a means" and so on. In a sense, Kant will have 
finalities ; a viscous, relatively permanent equilibrium will not 
satisfy him. He will have, as in mathematics, fixed rigid data 
and conclusions within these data as unchangeable as the data 
themselves. In truth he presupposes in "pure reason" a set of 
fixed concepts. Now witJmi these concepts, one may grant 
that a good will is good "without qualification." These sche- 
matically fixed, no one would question the "without qualifica- 
tion." This appHes the universe over, so far forth as the data 
or concepts are supposed tO' reach, to angels and to all othcr 
pure rationals. The nearer question is the applicability of this 
schematic treatment to the mixed combination, the physical- 
rational being called man. There is of course a network of 
presuppositions, economic and otherwise, behind Kant's state- 
ments ; "absolute," "wdthout qualification," "good in itself" and 
so on hold only within these abstract general presuppositions 
not distinctly enumerated. Change these conditions and other 
sets of "absolutes" arise. 

(c) What this "good will" is, what moral worth consists in, 
Kant develops from the notion of duty. The will that is good, 
whose acts have moral worth, is that which acts from duty's 
sake. Supposing the existence and the knowledge of duty, a 
will is morally good only when it acts solely from duty's sake. 
Any other motive is morally worthless, is indeed apt to sully 
and corrupt all ethical concepts. It would even seem that one can 
take no pleasure or happiness in duty itself. At all events one 
has no moral worth who without consciousness of duty has 
yet inborn pleasure in spreading joy and happiness round him. 
Kant at least has no fear of rigid formalism. Having taken 
his position of duty only for duty's sake, he does not com- 
promise ; he schematizes with noteworthy fixity. Whether 
this position turn one into a self-conscious, anxious, 
diseased, interrogator of conscience is for Kant not 
in question; whether one can be too dutiful is not 
for him a theoretical possibility ; duty for duty's sake is the 
ultimatum. 



258 ETHICS AND ECONOMICS 

(d) Whence comes the knowledge of duty, and what con- 
stitutes the content of duty, Kant has not yet needed to say, 
but one may note here that in spite of the refusal to regard 
utility requirements and consequences resulting from actions, 
as tests of duty, Kant nevertheless lets these ideas in. Thus: 
"to secure one's own happiness is a duty, at least indirectly for 
discontent may easily become a great temptation to transgres- 
sion of duty." "The sight of a being who is not adorned with a 
single feature of a pure and good will enjoying unbroken pros- 
perity can never give pleasure to an impartial rational specta- 
tor." That happiness and morality are causally connected is 
herein implied ; this fact leaves open the question as to which 
is the determinant in the connection thus indicated. The vague- 
ness of Kant's discussion of the duty to seek happiness fore- 
shadows the same questionable relation. The economic con- 
tent of duty is implied by Kant's very examples. The dealer 
exchanging wares is of course manifestly economic. The 
preservation of one's own life is the presupposition of any 
economic pursuit. The duty of beneficence becomes practical 
only when it reaches out into the external world. 

(e) Kant's fear lest the moral worth of an action from 
duty's sake be lost in the swing of inclinations and selfish 
desires is but an expression of the conflict in each of us of the 
social self with the private individualistic self. Clifford's tribal 
self, Stephens' social tissue, Spencer's racial evolutional inheri- 
tances or intuitions express the thought that the phenomenal 
individual which each of us is, is yet much more than a purely 
abstract personage cut off from social relations. Separate in 
space and in time, each of us is still in overwhelming mass 
social in origin and content. The imitative absorption of ideas 
in our early education, the fact that for the most part our 
science and our habits of feeling and judgment go with those 
of the majority of our fellows, the subjection even of our great- 
est men to the spirit of the times in which they live, is proof 
enough of this position. We see the world of which we our- 
selves are a constitutent part through a sentient point. Just 
as when we look out upon the world through a window, the 



ECONOMICS IN KANT'S ETHICS 259 

world appears in a sense disparate or separate from us, yet 
all the while we are ourselves an integral part of that same 
world, in a similar manner, we are indissolubly tied to, rather 
consist of, social relations, while yet we seem in a way separata 
from or independent of those relations. In the one case we 
may speak of the personal individual self; in the other case we 
may speak of the tribal or social self, of our social tissue, and 
so on. At times these selves are harmonious, at times they 
conflict. But in fact and on the whole the social self is by far 
the more important both as to content and as to consequences. 
Social relations mold the individual far more than the indi- 
vidual molds society. The individual is far more dependent 
upon society than is society upon any individual. The indi- 
vidual exists because of and for society far more than society 
for the individual. 

The "good will" of Kant is nothmg more than the hearty 
acceptance by the individual of the priority of the social claim, 
of the superiority, all things considered, of the social or tribal 
self to the individual self. The willing acceptance of this fact 
and action upon it as a fundamental principle make a man a 
moral character and stamp his corresponding acts as having 
moral worth. So far as angels or the kingdom of pure rationals 
come under the same category, schematic consistency pro- 
nounces a like verdict upon their characters and acts. There is 
nothing mysterious in the schematic extension; the mystery is 
the concrete facts of social origin and stamp united with spatial 
and temporal separation of the individuals. Kant's schematic 
individualism at first sight demands gigantic leaps into spectral 
spheres. The rigidity of his abstractions makes a death cham- 
ber for all the ethical progress of history. The conception of 
a tribal or social self relatively stable as concerns individuals 
admits a relative finality for this or that person at a certain 
stage of progress, but at the same time it provides a means 
whereby the change and the progress as seen in actual history 
become comparatively explicable. Compartments are more or 
less fixed but are also more or less fluid. Change, which is 
life, is not prevented at the outset. Even Kant's formaHsm 



260 ETHICS AND ECONOMICS 

almost repulsive at first glance becomes capable of a fairly 
acceptable reinterpretation. The fear of selfishness as a cor- 
rupter of morals is explained. The hesitancy to see any mor- 
ality in the willing non-moral spreading of joy roundabout is 
partly approvable even from a moral point of view. The fear 
of considering objective results as having a bearing upon the 
worth of an act is both understood and also laid at rest. It is 
seen that the effort of all politics and education is to produce 
a character that shall unconsciously take joy in heightening 
the social welfare of those about him. An anxious introspec- 
tion is repressed by rational considerations become instinctive. 

MORALITY RESTS ON MAXIM OF WILL 

To return to Kaiit's analysis; Kant's second proposition is: 
— "an action done from duty derives its moral worth, not from 
the purpose which is to be attained by it, but from the maxim 
by which it is determined, and therefore does not depend on the 
realization of the object of the action but merely on the prin- 
ciple of volition by which the action has taken place without 
regard to any object of desire." Since at the outset everything 
empirical is cut away by Kant, in order to secure an a priori 
moral philosophy, no empirical purpose to be realized, and no 
real effects as ends can be accepted in place of duty for its own 
sake; it follows that for angelic beings only the principle of 
volition or the formal a priori principle determining the will 
can have validity. 

This second proposition well illustrates the degree to which 
Kant carried his abstractions in individualistic terms. Kant 
is giving in this section of his book an analysis of common 
morality whereby he is to reach his fundamental principle. He 
is therefore dealing with the psychology of the mature indi- 
vidual. Now a psychological analysis may start and may stop 
at many different places. Kant in proposition one reaches the 
position that duty for duty's sake is fundamental in morals. 
The second position restates the matter, throwing emphasis 
upon the volition and its maxim rather than upon concrete 
ends to be attained or results to be achieved. This however 



ECONOMICS IN KANT'S ETHICS 261 

may mean only that the psychological analysis is limited by 
certain points. Hence illusion may exist as an element of the 
position attained. A further pushing of the analysis may drive 
out this illusory element. The question of the genesis and 
development oi that psychology becomes an important matter. 
A full answer to it is essential. Kant reaches finally the result 
that the universality of application of a maxim is the test of 
the moral validity of that maxim. 

Now Kant's second proposition is not in genuine contra- 
diction to the test which determines the morality of an action 
by its objective effects or results. Nor does this effects-test 
contradict the universality idea. That the moral maxim must 
be potentially universal means that objectively under the con- 
ditions accepted the universal practice of the maxim shall not 
produce a situation wherein there shall remain no working pos- 
sibility for the maxim. Thus, if lying be universal, trustworthy ■ 
communication becomes impossible, and lying itself is made of 
no avail. Or if all promise-making be treated as without 
validity, this is the same as reducing all promises to a zero 
value. The very test of universality thus reduces itself to a 
trying out by results. For it is manifest that only by carrying 
the maxim into practice can it be said to have any content 
at all. 

Grant the existence of the maxim as a bit of psychological 
fact in the mature individual, the genesis of that individual 
psychology is highly important. Kant's second proposition 
therefore needs nO' denial ; it is true enough regarded as a 
fractional aspect li a particular mental state. Evolutionary 
psychology may reinterpret that maxim as expressing the 
dominance of the social motive become instinctive in the racial- 
private self. Such crystallizations of racial and pre-reflective, 
imitative, personal experience represent long-range influences 
working up a mass psychology. They may largely conflict 
with the private interests of this or that person. The wilHng 
acceptance of the dictates of the tribal or social self in- 
stinctively uttered often sets aside consideration of purposes, 
of effects, and of selfish regards of the private person. In 



262 ETHICS AND ECONOMICS 

general, conformity with the demands of the social self is 
to be preferred to rdl other decisions. Viewing this psychologi- 
cal fact narrowly, that is, excluding all other considerations, 
then we have the Kantian maxim in a seemingly absolute 
form. Such willing acceptance is Kant's pure social 
morality. 

DUTY IS RESPECT FOR LAW 

Kant's third proposition is: — "Duty is the necessity of act- 
ing from res feet for the law. I may have an inclination for 
an object as the effect of my proposed action, but I can not 
have 7cspect for it, just for this reason that it is an effect and 
not an energy of will. Similarly I can not have respect ^or 
inclination whether my own or another's. * * * It is only what 
is connected with my will as a principle, * * * in other words, 
simply the law of itself, which can be an object of respect, and 
hence a command. Now an action done from duty must wholly 
exclude the influence of inclination, and with it every object of 
the will, so that nothing remains which can determine the will, 
except objectively the lazv and subjectively pure respect for 
this practical law and consequently the maxim, that I should 
follow this law even to the thwarting of all my inclinations. 
* * * Thus the moral' worth of an action does not lie in the 
effect expected of it, nor in any principle of action which 
requires to borrow its motive from the expected effect. For 
all the effects — agreeableness of one's condition and even the 
promotion of the happiness of others — could have been also 
brought about by other causes, so that for this there would 
have been no need of the will of a rational being, whereas it is 
in this alone that the supreme and unconditional good can be 
found. The preeminent good which we call moral can there- 
fore consist in nothing else than the conception of law in itself, 
which certaifily is only possible iyi a rational hchig, in so far as 
this conception, and not the expected effect determines the will. 
This is a good which is already present in the person who acts 
accordingly, and we have not to wait for it to appear first in 
the result." 



ECONOMICS IN KANT'S ETHICS 263 

In a footnote Kant answers a possible objection that in 
"respect" he takes refuge behind an obscure feeling instead 
of solving the question by a concept of the reason and says: 
"But although respect is a feeling, it is not received through 
influence, but is self-wrought by a rational concept, and there- 
fore is specifically distinct from all feelings of the former kind 
which may be referred either to inclination or to fear. What 
I recognize immediately as a law for me, I recognize with 
respect. This merely signifies the consciousness that my will 
is subordinate to a law, without the intervention of other influ- 
ences on my sense. The immediate determination of the will 
by the law, and the consciousness of this is called respect, so 
that this is regarded as an effect of the law on the subject, 
and not the cause of it. Respect is properly the conception of 
a worth which thwarts my self-love. * * * The object of re- 
spect is the law only * * * the law which we impose on our- 
selves, and yet recognize as necessary in itself. '-^ "^ * All so- 
called moral interest consists simply in j'espeet for the law." 

Concerning this third proposition of Kant and his discus- 
sion, we need remark only a few things. 

(a) Kant in his progress to pure reason constantly ab- 
stracts and schematizes aspects of actual experience psychol- 
ogy. Thus duty as the necessity of acting from respect for 
the law is an abstract generality concerning actual psychology 
in the presence of existing enforceable law. Respect for that 
concrete actual law as commands, we all understand. Our 
psychology is molding under the steady pressure of law. A 
willing acceptance of that law-abiding attitude after due con- 
sideration apparently transforms the objective constraint into 
a subjective director. Long-range results are to control 
momentary or short-range impulses, they even dominate calcu- 
lations of efifects expected. 

(b) One notices also the implied generic superiority of the 
active over the passive, — one respects not an "efifect" of the 
will but an "energy" of the will ; respect is not "received 
through influence, but is self-wrought." This and the like are 
of course only an echo or fragment of actual experience rela- 



264 ETHICS AND ECONOMICS 

tions presented in an abstract generalization which has 
sloughed off, or has disregarded, conditions wherein it has 
a relative validity. 

(c) The distinction between the social or tribal aspects of 
self and those of the individualistic self fits quite accurately all 
Kant's salient points. The social self gives the law to which 
the private self is subordinate. The social law and self deter- 
mine the private self. The "self-wrought" "respect" of the 
private self that willingly accepts the social law indicates "the 
conception of a worth which thwarts self-love." This law-abid- 
ing quality and character is "a. good which is already present in 
the person who acts accordingly and does not have to wait for 
it [the good] to appear first in the result," — provided, of 
course, social salvation is the accepted highest demand. If 
therefore abstractly we cut off all private motives and inclina- 
tions, there remain to determine the will, objectively only the 
law, and subjectively only pure respect for this law. Thus one 
can save the soul of Kant's representations without landing into 
the seemingly unbridged chasm between his static individualism 
and the indisputable fact of social and ethical evolutionary 
change. 

THE LAW IS UNIVERSAL 

Kant proceeds : "But what sort of law can that be, the 
conception of which must determine the will, even without 
paying any regard to the effect expected from it, in order that 
this will may be called good absolutely and without qualifica- 
tion?" 'Since the will has been deprived of every impulse that 
could arise to it from obedience to any law, there remains 
nothing' "but that universal conformity of its actions to law in 
general, which alone is to serve the will as a principle, i. e. I 
am never to act otherwise than so t/iaf I could also will that 
my maxim should become a universal law. Here now it is 
the simple conformity to law in general, without assuming any 
particular law applicable to certain actions, that serves the will 
as its principle, and must serve it if duty is not to be a vain de- 
lusion and a chimerical notion." 



ECONOMICS IN KANT'S ETHICS 265 

In the above, Kant reaches his apogee as concerns human 
■ethics. Abstract formaHsm can hardly proceed farther than 
this. No specific purpose to be reahzed, no ends or effects to 
be achieved, no impulses proceeding from inclination, affec- 
tion, physical need, or what not; not even this or that special 
law, but simple conformity to law in general, without assuming 
any particular law applicable to certain actions. The simple 
conformity to law in general constitutes the principle of the 
will and renders duty and morality real and "not a vain delusion 
and a chimerical notion." "I am never to act otherwise than so 
that I could also will that my maxim become a universal law." 
Kant's fearless rigidity of abstraction knows no tremors, no 
small-heartedness. The necessity of the virtue of law-abiding, 
of submission to authority, of passive obedience, has never been 
put more strongly ; not this or that particular law is matter of 
ultimate moral worth, but the mere form of law in general. 
Mathematical axioms have some content; equals of equals are 
equal is abstract and general enough, but it is concrete indeed 
compared with "the form of law in general." Necessarily 
when one has abandoned all particular individualizing elements, 
one must put forth as the sole shadow left, the proposition so 
to act as if one's maxim should become a universal law. 

But this remaining intellectual abstraction still retains a 
form known only through experience. One can easily see in 
Kant's words what is merely an exaggeration of a perfectly 
sound proposition, namely within given limits, the private self 
accepts without reservation the dictates of the social or tribal 
self; within those bounds or presuppositions, the action of each 
IS permissibly the action of all other persons ; the willing ac- 
ceptance of social rule is to be undiluted ; "the king can do no 
wrong;" "the state is impeccable." Submission to authority 
can go no farther. Only : since Kant has cut away all limita- 
tions or at least has allowed them to sink out of sight, his 
proposition and principles must needs take on a universality 
which renders the result almost spectral. The static quality 
of his representation abolishes the possibility of ethical change 
and growth ; or if not this, then his principle becomes so 



266 ETHICS AND ECONOMICS 

flexible as to lack all that guiding quality which he claims for 
it. The real guides and determinants must then come from 
other spheres, or from purposes, from ends, from results, ex- 
pressing economic and other physical needs. Kant demands 
consistency merely. So far, wholly good; but what actually 
makes up or constitutes the fact and content of things and 
principles having consistency is questionable. We must here 
go back to real things. Consistency is a form or mold; actual 
forces determine the things and the facts which have con- 
sistency. Real consistency follows the external forces; it is 
not their guide or determiner. 

Kant illustrates his position by discussing the question: 
"May I in distress make a promise with the intention not to 
keep it?" Kant here distinguishes two aspects; "whether it is 
prudent, or whether it is right to make a false promise." 'As 
to the prudence one sees that one must take a long-headed 
view of the matter. Possibly one might extricate himself in 
some instances by such an act, but the loss of credit may land 
him into greater inconveniences in the long run. Therefore 
the prudential regard for consequences may prove a difficult 
question. Such a maxim however is based only on the fear of 
the injurious consequences (to one's self). To be truthful from 
duty is wholly different. In this case there is already implied 
a law above me. In the prudential course I must consider 
what would affect myself. Deviation from duty is wicked ; 
unfaithfulness to a maxim of prudence may often be very 
advantageous though to abide by it is certainly safer.' "The 
shortest way however and an unerring one to learn whether a 
lying promise is consistent with duty is to ask. Should I be 
content that my maxim (to extricate myself from difficulty by 
a false promise) should hold good as a universal law for myself 
as well as for others? And should I be able to say to myself, 
Every one may make a deceitful promise when he finds himself 
in a difficulty from which he can not otherwise extricate him- 
self? Then I presently become aware that while I can will the 
lie I can by no means will that lying should be a universal law. 
For with such a law there would be no promises at all since it 



ECONOMICS IN KANT'S ETHICS 267 

would be in vain to allege my intention in regard to my future 
actions to those who would not believe this allegation, or if 
they over hastily did so, would pay me back in my own com. 
Hence my maxim, as soon as it should become a universal law, 
would necessarily destroy itself." 

Kant's above example and discussion may be taken as 
typical of his procedure. We may therefore handle it some- 
what at large even if we thereby anticipate some part of the 
subsequent discussion. Wholly apart then from the prejudging 
influence of the customary approbation of truthfulness wrought 
into us all by the myriad-fold injunctions of parents, teachers, 
poets, and romance writers, let us consider some of the pre- 
suppositions behind this problem and Kant's discussion and 
solution of it. "May I in distress make a promise with the 
intention not to keep it?" This question presupposes social 
relations, means of social communication, conditions under 
which communication shall take place, and therefore some sort 
of social interdependence. Now all this impHes much more 
than a kingdom of pure rationals. "Means of communication" 
implies steadfastness or consistency in symbols and in inter- 
pretations. If one is to communicate with another, so far 
forth as he is to convey a real message, he must conform with 
the customary significations put upon his expression. Failure 
to do this is failure in the very purpose for which the act of 
trying to communicate as such took its rise. Lying is thus a 
breach or annihilation of the fundamental purpose in communi- 
cation. So far as communication is regarded as existing solely 
for the purposes of truth-telling, then lying is a contradiction 
both logical and real of this presupposition. 

But if the means of communication may be used for other 
purposes than mere truth-telling, such use is not to be brought 
at all under the categories of truth-telling and of lying. The 
fact of the almost instinctive revolt at admitting such a possi- 
bility indicates the vast importance of truth-telling to persons 
who are not self-sustaining pure rationals, but mixed human 
beings subject to the constant pressure of economic, physical, 
and physiological necessities. If then a pure-reason mortal 



268 ETHICS AND ECONOMICS 

might use the means of communication for other than truth- 
teUing- purposes, the questions arise under what circumstances 
and with whom is truth-telHng in the use of the means of com- 
munication the unavoidable, the indispensable, requirement? 
Who may demand of me the truth and under what circum- 
stances? So far as truth-telling is primary, no one may lie. 
This is a necessity of mere consistency. But as to the "who" 
or the "under what circumstances," this takes one out of the 
formal scheme, a whole flood of limitations to the maxim ap- 
propriate to the truth-telling schema is thus allowed to enter. 
The simplicity of the abstract formula does not touch the com- 
plexity of the real limiting conditions. One may assume to 
demand truth from me, yet may have no right to make that 
demand, or he may seek it under circumstances which are 
inappropriate or even unjust. I may be under duress, or in 
abnormal conditions of health or of consciousness, and so on. 
I may in short be bereft of that pure-reason attribute and 
independent economic and physical status presupposed by 
Kant, and that too under circumstances from which I have no 
physical escape, or no power to avoid an answer. Truth-telling 
on set purpose forbids lying; an identical proposition, which 
however contains no key for the concrete problems of the 
mixed reason-animal called man. In other words, unless con- 
ditions and limitations be observed, Kant's formula becomes an 
empty identity. Embody the limitations in the formula and 
then Kant's universality is largely diminished. 

Hence " May I in distress make a promise with the inten- 
tion not to keep it "? The answer is, " I do not know. The data 
are insufficient ; in its present form the problem is indeter- 
minate." The proposition, "while I can will the lie, I can by 
no means will that lying should be a universal law," appears to 
be a mere shift from a case, where a condition or limitation is 
significant, to the general formula, to the identity that in truth- 
telling lying is forbidden as a mere contradiction. Kant's ap- 
pended reason shows the difficulty of escaping reference to ex- 
ternal results as more or less decisive of moral quality. "For 
with such a law (lying should be universal), there would be no 



ECONOMICS IN KANT'S ETHICS 269 

promises at all, since it would be in vain to allege my intention 
in regard to my future actions to those who would not believe 
this allegation, or if they overhastily did so would pay me 
back in my own coin." (This language would seem curious as 
the expressions of a pure rational). This reason derives its 
whole force from its suggesting concrete consequences in actual 
life. Otherwise Kant would hardly be likely to use so round- 
about an expression in order to say that universal lying is the 
annihilation of all truth-telling. The final reply then to Kant's 
question is as follows : Embody in the formula the conditions 
which make Kant's identical proposition have real content, 
then the formula is still a general rule or principle, but of a 
less range of application than the unlimited formula. In such 
cases the rule is good not merely for one's self, but also for 
any one else so situated. It ceases to have that private selfish 
individualistic aspect suggested by Kant's words. 

The schematic character of Kant's individualism is evident 
from a glance at one or two historical facts, intra-tribal moral- 
ity and extra-tribal morality. Within the tribe mutual trust 
and trustworthiness are conditions of tribal survival. Truth- 
fulness, and hence stable promises, is indispensable. Beyond 
the tribe all are more or less hostile ; therefore they are to be 
deceived in every possible way. The ethics of present-day 
warfare among civilized nations show this same attitude. The 
social and economic conditions of existence sustain this divorce 
of truthfulness and of lying as concerns members of a tribe to 
one another and to members of other and hostile tribes. After 
a lapse of time tribal consolidation takes place, whether by 
growth of population, by force, or in general by changed modes 
of production and distribution. The tribal area widens, and 
with its widenings, the range of truthfulness is extended. 
Abstractions in connection with world economics, and with 
supra-earthly economics, enlarge the range still farther; so that 
in the end one talks of "man as such," or of "members of a 
rational kingdom." In all this the influence of economic 
changes is manifest, but at the same time no warrant is given 
for attempting to represent matters as if earthly limitations 



270 ETHICS AND ECONOMICS 

were dissolved. Schematic generalizations as little free the 
individual from concrete conditions as the mere discussion of 
the possible actions of angels places food into the mouth of 
a hungry man. 

It needs but a momentary glance to perceive the economic 
massiveness of the virtue of truthfulness in the form of prom- 
ise-keeping. The immense development in modern times of 
credit econom}'- presupposes this virtue more and more. We 
have seen its significance in tribal preservation; the entire his- 
tory of human social development presupposes it all the while. 
In fact the fundamental economic pursuit in associated work is 
so steady and constant an influence in this direction that one 
is apt tO' overlook the economic stimulus, just as one is more 
struck by peculiarities of heredity than by the overwhelming 
mass of experience of heredity involved in "like produces like," 
or in the old doctrine of the fixity of biological species. 

Kant continues as follows : "I do not therefore need any 
far-reaching penetration to discern what I have to do in order 
that my will be morally good. Inexperienced in the course of 
the world, incapable of being prepared for all its contingencies, 
I only ask myself: Canst thou also will that thy maxim 
should be a universal law? If not, then it must be rejected, 
and that not because of a disadvantage accruing from it to 
myself or even to others, but because it can not enter as a 
principle into a possible universal legislation, and reason 
extorts from me immediate respect for such legislation." He 
then goes on to indicate that even the commonest m.an being 
bound to perform acts daily must possess the knowledge 
requisite to decide what duty is. (There is a curious ambiguity 
as to the origin and the meaning of this " bound " and this 
" must.") With this common man, Kant contrasts the phil- 
osopher or quasi philosopher who often enough simply per- 
plexes judgment by a multitude of counsels. 

Unfortunately the ease and the simplicity of using Kant's 
test is more in the representation than in the facts themselves. 
Let the average man consider principles of a possible universal 
legislation and it will be readily seen how vague the Kantian 



ECONOMICS IN KANT'S ETHICS 271 

test may be. If even our practiced legislators can not ade- 
quately draw up and predict the outcome of ordinary legisla- 
tion, a legislation for a universe of pure-reason creatures would 
quite surpass the average man's best endeavors. The only 
possible Kantian legislation would be of an indeterminate 
character such as is found in "be good," "be truthful," "duty 
for duty's sake," but such schematizing work is remote indeed 
from the practical man's field of operations. The universal 
legislation of the common man is apt to be only a reflex of a 
generally dififused Zeitgeist, or "spirit of the times," decisions in 
conformity with a set of presuppositions and tendencies not at 
all analyzable by such men. The facts expressed by Kant point 
rather tO' the dominance of the social tribal self, the subordina- 
tion of the private self to the social self; the pressure of present 
conditions molding a mass psychology in conformity with 
themselves, and hence a "universal legislation" impulse and 
expression congruent therewith. Abstracted, generalized, 
schematized, this universal legislation takes on an absolute 
static aspect. But social changes and economic developments 
split the fixed schema asunder. History shows this to be the 
fact. Neither Kant nor anyone else can permanently nullify 
the forces of living nature and its changes. 

TRANSITION TO METAPHYSIC 

Kant in the next section of his book makes the transition 
from popular moral philosophy to the metaphysic of morals. 
As he here practically repeats with greater detail and greater 
abstractness the ideas just handled, it will perhaps be sufficient 
for present purposes merely to point out here and there some 
things to emphasize the preceding suggestions. 

(a) The abstract schematic character of Kant's representa- 
tion. From experience "one can not find a single certain 
example of the disposition to act from pure duty." "In fact it 
is absolutely impossible to make out by experience with com- 
plete certainty a single case in which the maxim of an action 
however right in itself rested simply on moral grounds, and on 
the conception of duty." "I am willing to admit out of love 



272 ETHICS AND ECONOMICS 

of humanity that even most of our actions are correct, but if 
we look closer at them we everywhere come upon the dear self 
which is always prominent * * *." " * * * one may some- 
times doubt whether true virtue is actually found anywhere in 
the world, and this especially as years increase and the judg- 
ment is partly made wiser by experience and partly also more 
acute in observation." Now a doctrine, which gets seemingly 
as remote from actual life as this, might well be questioned as 
being a legitimate representation of human affairs. Of course 
as a matter of abstract schematic rigor of treatment, one can 
grant the position ; but it forces one to ask whether Kant is 
not dealing with some illusion, with a construction such as 
phlogiston or levity as chemical and physical principles. 

(b) Kant's demand for finalities, or complete certainties. 
We see this in the above so far as he is unable to find with 
complete certainty "a single example of the disposition to act 
from pure duty." This quest obsesses Kant, it is the demand 
of a static metaphysics. It is strictly consonant with thorough- 
ness of treatment. Lay down certain principles as given, then 
within these limits certainty should be attainable. But the 
next question is the adequacy of these principles to represent 
real things. The Ptolemaic astronomy was such a representa- 
tion; reality destroyed the image. Similarly with the Kantian 
quest. Kant will have an unbreakable finality. The history of 
ethical development should show the improbability of realizing 
such an expectation. 

(c) Kant's extension of his schemata beyond their known 
application. Kant can know "pure reason" only from his, 
knowledge of it in human experience. His morality is deduced 
for pure reason beings, and yet "unless we deny that the notion 
of morality has any truth or reference to any possible object, 
we must admit that its law must be valid not merely for men 
but for all rational creatures generally, not merely under cer- 
tain contingent conditions or with exceptions, but with absolute 
necessity, then it is clear that no experience could make us to 
infer even the possibility of such apodictic laws. For with 
what right could we bring into unbounded respect as a imiver- 



ECONOMICS IN KANT'S ETHICS 273 

sal precept for every rational nature that which perhaps holds 
only under the contingent condition of humanity?" This idea 
recurs again and again. Kant thus appears to gain an exten- 
sion for his system and a high sublimity, adding thereby an 
enormous weightiness to his propositions. But it is after all 
only an illusion generated by pushing abstractions wholly 
beyond any possible verification; or otherwise expressed, it is 
treating an hypothetical construct as if it were a genuine reality. 
Rational creatures beyond the earth are not known. What 
man would be, divested of his earthly framework, no one can 
tell. The "absolute necessity" called for by Kant is only the 
necessity of consistency ; words recurring in the same discus- 
sion should have an identity of meaning. There seems no 
weighty mystery in all this. We have such "absolute necessi- 
ties" a milHon-fold every day in every bit of genuine reasoning ; 
fixed consistency of representation is no guarantee of fixity in. 
real relations. 

(d) Kant constantly lapses back into the empirical con- 
sciousness which he would schematically disregard. Notwith- 
standing the first flaw, namely, that even of "pure reason" we 
have our first knowledge only in experience, we still learn that 
"there is one end, however, which may be assumed to be 
actually such to all rational beings (so far as imperatives apply 
to them, viz. as dependent beings), and therefore one purpose 
which they not merely may have, but which we may with 
certainty assume that they all actually have by a natural 
necessity, and this is happiness." * * * a purpose, "which we 
may presuppose with certainty and a priori in every man, be- 
cause it belongs to his being." " * * * all the elements which 
belong to the notion of happiness are altogether empirical, i. e. 
they must be borrowed from experience." The apriorism which 
the combination of these two propositions would yield should 
seem rather curious indeed. One sees here also the shadow of 
the doctrine of "the natural rights of man," so much debated in 
Kant's time. "Rational nature exists as an end in itself. Man 
necessarily conceives his existence as being so." Here we 
have the embryo of "natural rights," and the abstract extension 



274 ETHICS AND ECONOMICS 

of what is at bottom only the instinctive aim and struggle 
for empirical self-preservation. 

One sees the same lapse repeated, more especially in con- 
nection with the hints and the references to effects, social, po- 
litical, and economic, whereby Kant's system of ideas appears 
to grow. Thus : " * * * the conception of the moral law exer- 
cises on the human heart by way of reason alone (which first 
becomes aware with this that it can of itself be practical) an 
influence so much more powerful than all other springs which 
may be derived from the field of experience, that in the con- 
sciousness of its worth it despises the latter and can by degrees 
become their master." All of which knowledge is only a 
transcript of human experience and of growth in spiritual pride. 
Kant's supreme principle for all rationals must yet admit that 
"practical rules must be capable of being deduced for every 
rational nature, and accordingly for man." That is to say, 
provision at least is made for the introduction of an empirical 
content into Kantian "pure reason" ethics. "Everything in 
nature works according to laws." "Rational beings alone have 
the faculty of acting according to the conception of laws, i. e. 
they have a will." " * * * if the will does not in itself com- 
pletely accord with reason (which is actually the case with 
men) etc." All these claims of knowledge are impossible with- 
out concrete experience. Such conceptions as law, obligation, 
commands, are abstractions from actual social life. Interest, 
dignity, mental disposition, universally valid legislation, cate- 
gorical and hypothetical imperatives, something whose exist- 
ence has in itself an absolute worth; perfect and imperfect 
duties, that is, those which can and those which can not be 
enforced by external law ; the real legislative authority of duty ; 
a kingdom of ends ; a union of different rational beings in a 
system by common laws; members of such a kingdom, subjects 
and a sovereign thereof; market value, fancy value, intrinsic 
worth or dignity ; freedom, autonomy ; — all which terms abound 
in Kant, — these things are reproductions, in abstract sche- 
matic form, of concepts and relations manifested in our daily 
lives; they are impossible apart from experience, just as im- 



ECONOMICS IN KANT'S ETHICS 275 

possible as it is for sage or poet to depict heaven or hell except 
in terms derived from human experience, there being no other 
language which man can understand. It is not that we are 
objecting to abstractions and generalizations taken from ex- 
perience and systematically arranged. All science is just this 
thing. The point we would make is that the abstractions shall 
not be such as to totally cancel the experience from which 
they are taken. From experience they must return to ex- 
perience. The question is, was it necessary so to divorce real 
ethics from all experience as to make any return a question- 
able possibiHty? Could not a truer basis of explanation be 
found? Even if man have a pure rational part that shall 
survive in an immortal life beyond the grave, one can see no 
valid reason why the principles of conduct appropriate to that 
condition should be transferred to the present Hfe, just as if 
the conditions of sensuous earthly life made no difference in 
the situation. What would be said of a scientist who did not 
evaluate a factor which affected every aspect of his problem, or 
who treated such a factor as insignificant? Yet not for one 
week can any "pure-reason" mortal disregard the commonest 
economic and physiological needs without likelihood of death. 
Kant's moral principle is only a problem exercise. His moral- 
ity is not human morality. 

Kant makes the freedom of will the sole principle of 
morality. He discusses other principles such as happiness 
physical or moral, perfection, and the will of the deity. One 
needs not do other here than point out that Kant more or less 
on empirical grounds condemns them all, as contrasted with 
his own schematic finalities. Thus though he admits that the 
"laws whispered by an implanted sense are better than noth- 
ing." still 'they lack that universality valid' "for all rational 
beines without distinction ; the unconditional practical necessity 
which is thereby imposed on them is lost when their foundation 
is taken fro^-i t^e partiadar constitution of human nature or the 
accidental circumstances in which it is placed." 'The principle 
of ^r^vate happiness is the most objectionable, for it is false, 
is contradicted by experience, contributes nothing to establish 



276 ETHICS AND ECONOMICS 

morality, and worst of all puts the motives to virtue and to 
vice in the same class and thus extinguishes the specific dif- 
ference between virtue and vice. The doctrine of the moral 
sense is to substitute feeling for reason ; but feelings naturally 
differing infinitely in degree can not furnish a "uniform" 
standard of good and evil, nor has any one a right to form 
judgments for others by his own feelings. The doctrine of 
perfection is empty and indefinite and consequently useless 
for finding in the boundless field of possible reality the greatest 
amount suitable for us. Moreover in trying to explain, it 
inevitably tends to turn in a circle. Nor can we appeal to the 
divine perfection, for of the divine we have no intuition; we 
deduce it only from our own conceptions, the most important 
of which is that of morality. Our explanation would thus be 
a gross circle; other conceptions of the divine will as glory, 
dominion, might, and vengeance are conceptions, which directly 
oppose morality.' In all this we see plainly enough that em- 
pirical grounds or their abstract schemata derived from expe- 
rience are placed in opposition to Kant's. It is therefore 
impossible to exclude those empirical considerations which 
Kant would have us wholly disregard. 

(e) Here we return to Kant's test of morality. "Act only 
on that maxim whereby thou canst at the same time will that 
it become a universal law. Since the universality of the law 
according to which eflfects are produced constitutes what is 
properly called nature in the most general sense (as to form), 
* * * Act as if the maxim of thy action were to become by thy 
will a universal law of nature." In this version, Kant is 
evidently seeking to swing his formalism back into the sphere 
of real existence. More life, vigor, concreteness is needed. 
He then recurs to the example of the suicide for testing his 
case. 

"A man reduced to despair by a series of misfortunes feels 
wearied of life, but is still so far in possession of his reason 
that he can ask himself whether it would not be contrary to 
his duty to himself to take his own life. Now he inquires 
whether the maxim of his action could become a universal law 



ECONOMICS IN KANT'S ETHICS 277 

of nature. His maxim is: From self-love I adopt it as a 
principle to shorten my life when its longer duration is likely 
to bring more evil than satisfaction. It is asked then simply 
whether this principle founded in self-love can become a 
universal law of nature. Now we see at once that a system 
of nature of which it should be a law to destroy life by means 
of the very feeling whose special nature is to impel to the 
improvement of life would contradict itself, and therefore could 
not exist as a system of nature, hence the maxim can not 
possibly exist as a law of nature, and consequently would be 
wholly inconsistent with the supreme principle of all duty." 

Now besides a number of subordinate objections, one can 
readily see that Kant has here either begged the question by 
shifting the ground, or that he is testing by results the morality 
of an act when fully universalized or generalized, (which act 
in practice need however never be regarded universally). "From 
self-love I adopt it as a principle to shorten my life when its 
longer duration is likely to bring more evil than satisfaction." 
If now everyone else, if every rational being, be permitted to 
act upon the same principle, there seems to be no destruction 
of the universality of this maxim. Everyone may act simi- 
larily; suicide is therefore not contrary to duty. A hkelihood 
that a continuance of life will bring more evil than good is the 
test. Apply the test fairly as intended ; let every one do the 
same, and act accordingly. No exception being made, the 
requirement of Kantian universality of legislation is satisfied. 
Of course Kant would not accept this. He therefore shifts 
ground to a "universal law of nature;" next he cuts out the 
qualification or condition expressed in the maxim, and further 
places a rather arbitrary interpretation upon the end, aim or 
function, of feeling. The condition expressed is the rational 
likelihood that more evil than good will ensue from further 
duration of life. A system of nature of which it should be a 
law to destroy life under these circumstances is not a contra- 
diction or destruction of itself. The condition implies that so 
long as a preponderance of good as a possibility shall exist the 
purpose to suicide shall not go into fulfilment. This permits 



278 ETHICS AND ECONOMICS 

the continuance of the system so long as more good than evil 
results. If the system infallibly results in more evil than good, 
then every one would say the sooner it perishes the better. 
Kant, however, would not accept this. Kant would imply that 
existence on any terms is to be preferred by a rational being, 
though he elsewhere tells us that "the sight of one devoid of 
all features of a pure and good will enjoying unbroken pros- 
perity can not satisfy any rational impartial spectator," and 
to avoid this latter possibility he in the end creates God, free- 
dom, and immortality. He therefore implies a causal relation 
between goodness and happiness. But the reverse is just as 
true; a system in which evil, or unhappiness, should contin- 
uously outweigh the good ought to perish. The thought, that 
the special nature of the feeling of misery or evil is to impel 
to the improvement of Hfe, is of course a comment, not a 
priori, but derived from experience itself. Kant's use of it 
here has force only because of the manifold cases exhibited in 
real life, where a happy exit from threatened disaster has 
been found. In other words the argument gets its power 
from empirical cases. But the original proposition assumed 
or implied convictions on rational grounds. Grant the grounds, 
and the morality of suicide follows. Shift the grounds, and 
the real argument rests upon empirical chances or resulis. 
That "a system of nature of which it should be a law to destroy 
life by means of the very feeling whose special nature it is to 
impel to the improvement of life would contradict itself, and 
therefore could not exist as a system of nature" means no 
more than that at one moment the system exists, at some 
other moment it may not exist ; this is a recurrent phenomenon 
of experience ; there is nothing surprising about this fact. The 
real trouble would be to conceive first that the system must 
continue to exist always, and at the same time to contain 
within itself the necessity that it must some time come to an 
end. In other words, Kant here implicitly begs continuance 
in existence as he does explicitly in his "Critique of Practical 
Reason" p. 133. His proof therefore of the immorality of 
suicide as a breach of this continuance is a mere petitio ; the 



ECONOMICS IN KANT'S ETHICS 279 

argument is worthless, and despite Kant's authority should 
have no weight with a reasonable man. 

Now life, or rather its inviolability, is simply an expression 
of the instinct of self-preservation ; its continuance is the postu- 
late of all economic and other human struggles ; it applies 
to the social self and to the private self. It is also the postulate 
in all efforts for social and individual improvement. If any one 
deny its validity, all hold upon such a person is lost precisely 
as all hold is lost upon him who declines to accept Kant's 
categorical imperative, the command to be just or righteous, 
in a word to be a good man. The social answer is that if 
society is to hold fast to the postulate, it must seek to renew 
the force of the postulate for and upon the denier. Unless 
this can be done, it were both useless and a needless social 
expense to try to constrain him. 

Kant next leturns to his example about promises, the bor- 
rowing of money under necessity, knowing that without the 
promise the money will be withheld, and knowing also that 
repayment will be impossible. We have already touched upon 
this example, but from the side of truthfulness. Here we 
shall touch it briefly upon its economic side. Now one sees 
in Kant's statement that he presupposes certain economic rela- 
tions as continuing fixed or unquestionable ; property rela- 
tions, an exchange economy, individualistic exclusive owner- 
ship, which may override, if the holder will, the necessities 
of all other persons. Since the origin and the conditions of the 
guarantee of these economic and social relations do not 
enter into Kant's reckoning, hence also the character of the 
"necessity" weighing down the borrower is not considered. 
The maintenance of the sfahts qvo is begged. Now if this 
status quo be regarded merely formally, if the example be put 
merely as an abstract problem-exercise, then it follows from 
mere consistency that if any one accepts to abide by these 
conditions, he must conform with them on peril of incon- 
sistency and contradiction. It likewise follows that if promise- 
breaking were universalized, a system of nature based upon 
these presuppositions would be annihilated, at least as regaids 



280 ETHICS AND ECONOMICS 

borrowing on promises. But all this is simply such a case as 
white is not black. A is not non-A. 

When, however, one steps out of this formal compart- 
mentalization into real relations the whole aspect of the matter 
changes. The abstract generality fixed and immobile had 
sloughed off concrete conditions. Consistency or self-agree- 
ment alone remained as the ultimate test. But in the revised 
conception, the conditions of concrete existence come throng- 
ing back. Even in the formal case those, who would not 
accept the status quo as something to be maintained, were not 
bound to abide by its conditions ; they were in no peril of 
inconsistency or contradiction. The Kantian test failed in 
their case. The situation is much the same when the questioi; 
has ceased to be one of a merely schematic world. In the 
real world, the origin and the social results of principles count; 
the character of the "necessity" counts; the economic relations 
count ; the million-fold interests, passions, weaknesses and pow- 
ers of man and of nature count. Dream ethics of "pure-reason" 
"angelic" hosts evaporate : real, blooded, solid social customs 
tread the earth. Only from the fact that K?nt in his ethical 
system-building repeatedly returns to the real world, and as 
it were filches from it a bit ot reality for his system, does he 
manage to give to his formalism the semblance of actuality. 
Antaeus-like he gclins his power from the earthly ingredients. 
With his schemata as such and the corresponding morality 
there is here no quarrel ; rather, perfect agreement. The 
quarrel is with the adequacy of his schemata as representing 
life. Real social and ethical history tear his forms into pieces. 
Those who do not accept his presuppositions are not caught in 
his net ; or if you will, in concrete life a contest is on. 

In such a contest there are those contending for one set 
of concepts, principles, or ideals ; there are others contending 
for a different set of concepts, principles, or ideals relating to 
the same subject-matter. A temporary equilibrium is estab- 
lished, or one of the contesting bodies is overthrown or anni- 
hilated. Peace and some sort of formularies are established, 
until another opposition party is born, or a new center of dis- 



ECONOMICS IN KANT'S ETHICS 281 

turbance is generated ; and then a new contest develops. His- 
tory shows that for the most part these centers and causes 
of strife bottom on economics direct or indirect. The ethics 
follow the economic struggle. This, one can the more readily 
believe, when one sees that even the abstract Kant seeks to 
give distinctness and clarity to his expositions by examples 
taken from the economic field. 

(f) One may repeat here what was said above, — let one 
apply to Kant's various propositions the ideas of a social self 
and a private self, with tht postulates of the continuance of 
social relations, and one will readily enough be able to rein- 
terpret Kant's words in a sense, not so rigidly schematic of 
an abstract individualism, but much nearer to the moving 
realities of human earthly life. 

MORALITY PRESUPPOSES FREEDOM 

Kant finally bases his moral philosophy on the freedom 
or autonomy of the will, 'that property by which it is a law 
to itself.' 'A mere analysis of the conceptions of morality 
shows their sole principle is the freedom or autonomy of the 
will;' Thus comes into view the age-long dispute about 
freedom and necessity. It is not the purpose here to enter 
into this jungle of schemata pushed to or beyond worKEble 
limits. Only a few notes. Kant defines thus : "The will is a 
kind of causality belonging to living beings in so far as they 
are rational, and freedom would be this property of such 
causality that it can be efficient, independently of foreign 
causes determining it; just as physical necessity is the prop- 
erty that the causality of all irrational creatures has o\ being 
determined to activity by the influence of foreign causes." 
Kant identifies the proposition that the will is in every action a 
law unto itself with the principle of morality, act as if thy 
will were to be a universal law; hence he who grants the full 
reality either of freedom or of Kantian morality must accept 
the other from mere analysis. "Freedom, however, we could 
not prove to be actually a property of ourselves or of human 
nature; only we saw that it must be presupposed, if we would 



282 ETHICS AND ECONOMICS 

con:eive a being rational and conscious of its causality in 
respect to its actions, i. e. as endowed with a will." Now 
though the principle of autonomy and that of the moral law 
are thus identified, 'why should I as autonomous rational being 
subject myself to this principle of the moral law. It is neces- 
sary to discern how this comes to pass. The difficulty is still 
greater when one considers that beings similar to men are 
affected also by springs of another kind, viz. sensibility.' The 
question is '■'■■whence the moral law derives its obligations.*^ 
"It must be freely admitted that there is a circle here from 
which it seems impossible to escape. In the sphere of efficient 
causes we assume ourselves free in order that in the sphere 
of ends we may conceive ourselves as subject to moral laws, 
and we afterwards conceive ourselves as subject to these laws 
because we have attributed to ourselves freedom of will, i. e., 
we derive our freedom from the subjection to the moral law, 
and then we explain our subjection as resulting from free- 
dom." How avoid this " circle "? 

"One resource remains to us, viz., to inquire whether we do 
not here occupy different points of view, when by means of 
freedom we think ourselves as causes efficient a priori, and 
when we form our conceptions of ourselves from our actions 
as effects which we see before our eyes." Kant here falls 
back upon his former work, " The Critique of Pure Reason." 
Man is both of this world and above this world, he is a myste- 
rious "thing in itself" and a creature of sensuous experience; 
a member of the intellectual world, angels, higher spirits, and 
a member of the world of sense here below, with a body and 
all its needs and desires. 'The world of sense may be different 
according to the difference of sensuous impressions in various 
observers, while the other (intellectual) which is the basis of 
the world of sense slways remains the same.' * * * "Even 
as to himself, a man can not pretend to know what he is in 
himself from the knowledge he has by internal sensation. For 
as he does not as it were create himself and does not come by 
the conception of himself a priori but empirically, it naturally 
follows that he can obtain his knowledge even of himself only 



ECONOMICS IN KANT'S ETHICS 283 

by the inner sense, and consequently only through the appear- 
ance of his nature and the way in which his consciousness is 
affected. At the same time beyond these characteristics of 
his own subject, made up of mere appearances, he must neces- 
sarily suppose something else as their basis, namely, his ego, 
whatever its characteristics in itself may be." 

The above quotation looked at closely shows clearly that 
Kant is caught in the web of experience even for his apriorism, 
that his apriorism is only the matter of making rigid abstrac- 
tions and pushing these abstractions to or even beyond any 
verifiable Hmits, He thus has pushed his principle of all 
morality into a realm not to be explored, nor are the connec- 
tions of this "higher" world with the world of sense made 
explicable. Merely this, in order to hold a position, Kant 
transfers by a thrust and throw his foundation into a place 
where it can not be attacked, since by hypothesis the region 
can not be approached, and yet he does not hesitate to assert 
that this conjectured realm is the only solid part of the aban- 
doned world of experience. The last refuge of the intuitiomst 
and the mystic is ever — a mystery. 

PURE REASON ETHICS AND REAL LIFE 

How the "pure reason" is to subject the sensuous side of 
man to itself and to morality Kant can not make plain. "In 
order indeed that a rational being who is also affected through 
the senses should will what Reason alone directs such beings 
that they ought to will, it is no doubt requisite that reason 
should have a power to infuse a feeliiig of pleasure or satisfac- 
tion in the fulfilment of duty, that is to say, that it should have 
a causality by which it determines the sensibility according to 
its own principles. But it is quite impossible to discern, i, e. 
to make it intelligible a priori how a mere thought, which 
itself contains nothing sensible, can itself produce a sensation 
of pleasure or pain ; * * * it follows that for us men it is 
quite impossible to explain how and why the universality of 
the maxim as a law, that is morality, interests. This only is 
certain, that it is not because it interests us that it has validity 



284 ETHICS AND ECONOMICS 

for us (for that would be the opposition of freedom, and the 
dependence of practical reason on sensibility, namely on a feel- 
ing as its principle, in which case it could never give moral 
laws) * * *." A strange blind alley it seems ; ' it is no doubt 
requisite that reason should have a power to determine the 
sensibility according to its own principles, but if it does so in 
order to interest us in morality the morality perishes. Why 
this great endeavor to escape the empirical quality of morality, 
if in the end we can not discern the reality of the principle 
of pure morality, or even conceive how to get the pure doc- 
trine to work in connection with the physical man? Or what 
shall we say of a morality which resting in an abstract separa- 
tion of soul and body can not rebridge the chasm and render 
more explicable the bodily relations and the social empirical 
morality which the ultra-earthly system affects to despise? 

As an exercise in schematic abstraction Kant's moral phi- 
losophy is more or less masterly indeed. But in the end it only 
starts more strongly the doubt. If so elaborate a structure 
to insure a pure unempirical system of morals after all leads 
into a blind alley, if while despising the empirical it still to the 
last can not move without the empirical, and if with alS its 
labor it can not clearly show how to make man responsive 
through sensibihty to the commands of pure reason, one must 
certainly raise the question, whether the structure were after 
all quite worth the trouble which it cost. Why not at once 
work up a relatively compact moral edifice, even though only 
a temporary one, live in it as long and as comfortably as pos- 
sible, repair, abandon outworn portions or else then build 
anew? Just this in fact is what the world actually does, and 
has done these thousands of years. 

"THE CRITIQUE OF PURE PRACTICAL REASON" 

Into Kant's more formidable work "The Critique of Pure 
Practical Reason," we need not enter. Its content is merely 
an elaborate repetition of the preceding ideas. In it we become 
aware that the entire Kantian morality bases simply upon some 
faulty psychological analysis, namely, the origin and the inter- 



ECONOMICS IN KANT'S ETHICS 285 

pretation of the attitude of the mind in the presence of the 
moral law. For example : " Ought a man do such or such an 
act"? may be in question. Suppose the man says that he is 
conscious that he ought to do the act. Since he ought, Kant 
adds, "he judges therefore that he can, he recognizes that he 
is free, a fact but for the moral law he would never have 
known." Now the keypoint here is simply — a cluster of psycho- 
logical facts. Kant accepts merely the surface interpretation. 
He passes by any critical question as to the constituents, that 
is, the genesis of that consciousness. Kanf s whole analytic 
of morality rests upo7i this one point. But the world, freed 
at last from the dogmatic theological dominance of the middle 
ages, cuts far deeper into psychology. The evolutionist with 
his historical comparative and genetic psychology brings 
down into ruins with one vigorous shake the whole edifice of 
Kantian ethics. 

" GOD, FREEDOM, AND IMMORTLITAY " 

The crown of Kant's labors is that he finally attains to 
God, freedom, and immortality, as the ultimate bases upon 
which he rests his moral philosophy. For present purposes the 
most remarkable thing about this solution is the fact that, in 
spite of all Kant's abstractness and avoidance of the empirical 
and contingent, actual empirical demands make their reality 
and power dominant. Kant will have nothing to do with 
results or consequences as tests of morality; happiness as a 
motive utterly taints the fountain of moral purity. But in 
order that morality should be conjoined, even in pure rationals, 
with happiness, felicity, blessedness, that is, an agreeable state 
of consciousness, Kant demands immortality as a field wherein 
this conection shall be realized, wherein the apparent failures 
in this life to secure proportionality between goodness and hap- 
piness shall undergo a proper adjustment ; besides this he 
demands the existence of the Deity as guarantor of such com- 
pensating amendment. Kant sloughs off with seeming success 
many empirical elements. It is significant indeed to find the 
serpent's skin of empiricism in large though thinnish folds at 



286 ETHICS AND ECONOMICS 

the end of the entire progress. Economic, social, and physical 
wrongs and weaknesses are all too evident in our daily inter- 
course. Kant lifts us by abstraction into purer realms; angels 
wing their way about us; we ourselves are of the same spiritual 
tribe. The failure in our concrete lives to get the justice and 
the happiness that belong to us, (as it is said), the insistent 
demand that the hire be worthy of the laborer, that each have 
an equal right and title to enjoyment, to happiness, to a fair 
chance, to a healthy body, to a decent home, and to an honor- 
able livelihood, all this is familiar to the concrete empirical 
man, as are also the pressure and the power of physical, 
physiological, psychological, and economic influences and 
necessities. The demand of each for a full life, however narrow 
or limited the idea of a full hfe may often be, the demand that 
here on this earth social worth should be commensurate with 
social means, in a word, justice and contentment should go 
side by side, this demand of earthly economic-ethics reappears 
in the end in a disguised form as the last refuge of the abstract 
Kant. Out of the feeling of oughtness — origin not explained 
by Kant, but explained by evolution — Kant begets God, free- 
dom and immortality, in order that the earthly demand should 
finally secure realization. Thus Kant's schematic apriorism 
commits a transcendental suicide. God, freedom, and immor- 
tality is Kant's solution of what is at bottom for the most 
part an economic problem; economic for the bulk of social 
injustice, of social and individual unhappiness, rests directly 
or indirectly upon economic inequality. The pervasiveness of 
economics can hardly be more perfectly illustrated than by 
Kant's ultimate postulates or conclusions. If then a Kant fail 
to escape the empirical and the economic, thinkers less vigorous 
and less abstract may take heart and work for a result less 
final than Kant sought. An abstract fraction of human life, 
the " pure reason " figment, needs not be galvanized into a 
quasi independent entity whose existence shall reach beyond 
the grave, with a consequent inversion of the relative values 
of the present and the future worlds, and with an utter con- 
fusion or uncertainty as to what should be the center of the 



ECONOMICS IN KANT'S ETHICS 287 

target of human aims. A workable system nearer to human 
needs may after all not be so despicable a moral code as Kant 
would have us believe. 

KANT'S "PRINCIPLES OF JURISPRUDENCE 

If notwithstanding its abstractness Kant's moral philosophy 
can not conceal its economic and empirical origin as regards 
content and movement, still more evident is this relationship 
when you follow Kant into the less abstract realm, the princi- 
ples of jurisprudence, a realm of applied ethics, not one ot 
merely general moral philosophy. Here you run upon "the 
social contract" as an "idea of reason," property rights, per- 
sonal rights, the state, active citizens, passive cuizens, govern- 
mental departments, legislative, executive, judicial, slavery, 
war, international law and so on. Kant is of course always 
seeking the "pure-reason" fundamental principles on which 
these phases of development rest. He expresses them with an 
air of certainty and static finality. Apparently he leaves you 
in no doubt that consciousness or reason is the driver and 
determiner of the empirical facts. But as you read on with 
practiced eye, it becomes almost comical how easily you can 
see that the concrete social, political and economic relation."* 
and ideas of his time dictate his "pure-reason" derivations, and 
how readily he can bend his "pure-reason" deliverances to fit 
the exigencies of his day. You see that a ghostly abstraction 
of the actual and historic relations which result from social and 
economic struggles is reflected from or upon the mirror of the 
consciousness that is generated in and by the struggles. This 
reflection expressed in general terms is represented as the prius 
and driver of the variegated tumultuous procession. The prod- 
uct and result is presented as the cause. The formal system- 
atizing character of the whole is forced upon your attention. Or 
in other words, concepts, definitions, fixed principles are pushed 
to or beyond their bounds, and the whole is regarded as pre- 
senting a reproduction of the realities of experience. However 
the real, the long-range economic, breaks through so vgor- 
ously that one can scarcely wish a better proof of the A^i^ar^ian 



288 ETHICS AND ECONOMICS 

evolutionary position that economics mold the phases of con- 
sciousness and not conversely, than to read Kant's "Principles 
of Jurisprudence." We can not here give details. We can 
only, on the strength of the preceding discussion, invite a 
doubting reader to make a trial for himself. 

ORIGIN OF ETHICAL FINALITIES 

Kant gives in his "Critique of Practical Reason" a clear 
enough statement how his ethical finalities are evolved. "We 
become conscious of pure practical laws just as we are con- 
scious of pure theoretical principles by attending to the neces- 
sity with which reason prescribes them, and to the elimination 
of all empirical conditions which it directs." It will perhaps 
be worth while to take a broad view of Kant's general proced- 
ure in order better to estimate his ethical apriorism. We 
may thus see how it comes that such rigid constructions get 
so far from concrete facts, how they persist in assuming cer- 
tainty and finality, and yet after all wither away in the lapse 
of time. 

SUBJECTIVE AND OBJECTIVE WORLDS 
The whole problem arises from two or more elements : 
(a) the desire to know reality with (b) some degree of change- 
less certainty. Apparently each conscious mind is somehow 
an isolated individual, enclosed within or completely tied to a 
body occupying a separate portion of space and of time. A vast 
universe fronts each person, of which universe that person is a 
part. The mind somehow mirrors in consciousness the outer 
world of matter and that of the inner self, and their relations 
one to the other. Each oflfers to the conscious mind an infinity 
of occurrences in its own realm, and another infinity entangling 
the two realms together. Each science is an attempt to collect 
and to systematize certain kindred aspects of these realms. 
Some sciences seem to be wholly concerned with the outer 
world, wherein man has neither part nor parcel, other than to 
observe, record, and systematize, as in astronomy, inorganic 
chemistry, and the like. Other sciences seem to be wholly 
concerned with the inner world, such as psychology, and logic. 



ECONOMICS IN KANT'S ETHICS 289 

In these, man is as it were analyzing himself more or less. He 
may seem for a time to remove himself as far from the outer 
world as the outer world of astronomy is removed from him. 
Plainly, however, as seen from the preceding discussion of 
Kant, the outer world with its influences breaks through the 
barriers — the inner life is more openly conditioned by external 
elements than conversely. It is not the business here to follow 
out these views ; rather it is to try to understand how meta- 
physics, physics, astronomy, psychology, and so on, arise as 
sciences, and run into rigid extremes or finalities, 

SCIENCES ARE FACTS PLUS FORMULAS 

Each science consists of a group of kindred phenomena tied 
together or systematized according to ideas or principles. At 
bottom each mdividual passes through a series of conscious 
experiences; he is a living, continuous stream of sensations, 
thoughts, and emotions, having certain parts relatively more 
significant or noticeable than other parts. Day after day for 
example the same furniture in the same room defines with 
increasing clearness permanent features in each person's con- 
tinuous consciousness. Unified objects are thus as it were 
deposited, or constructed in, out of, or from the elements of 
that stream. In the immense variety of human relations every 
person is intentionally or unintentionally undergoing more or 
less the same processes. The wonderful art of communication 
enables persons to compare and to identify like elements of 
their experiences. Thus come the "facts" which constitute 
the groundwork of sciences. Further comparison shows that 
these "facts" are more or less closely connected. The problem 
of a science is so to group kindred facts by explanatory or con- 
necting principles and formulas that one may pass from fact 
to kindred fact in a secure, constant, and reliable way. That 
scheme which connects the greatest number of facts by the 
securest, the easiest, and the most reliable bonds takes pre- 
cedence over any other scheme seeking the same object, 
namely, the explanation or the connecting up of known ele- 
ments. 



290 ETHICS AND ECONOMICS 

Thus to take the old example: the Ptolemaic astronomy 
which placed the earth as the center of the apparent revolution 
of the stellar universe explained or tied together a number of 
observed facts; sun. moon, and stars do at first sight appear 
to revolve around the earth. Even the wanderings of the moon 
and the planets among the stars were explained more or less 
by additions to the idea that they went round the earth. But 
when the motions of these wanderers were considered more 
deeply and with more detail, the machinery mentally conceived 
as necessary to explain the deviations, while yet retaining the 
central position of the earth, became more and more intricate. 
All this complexity the Copernican system wiped out by substi- 
tuting the ideas that the sun is the center of the solar system, 
and that the revolution of sun, moon, and stars round the 
earth is but an illusion springing from the rotation of our 
world upon its axis. In no way have the astronomical "facts" 
of the senses changed. Simply the mode of tying the facts 
together is altogether different. Multitudes of other facts 
seemingly but remotely connected with astronomy are also 
found to be in harmony with the Copernican conception, which 
facts would be inexplicable on the Ptolemaic system. Hence 
the impossibility of ever going back to the Ptolemaic explana- 
tion. Similarly at one time the evolution of society, of the 
family, of the state, was patterned after the poetry and the 
facts in the biblical story. Fuller knowledge of human society 
in all grades of civiHzation and in human hisiory completely 
upsets the patriarchal theory of society, of the family, of the 
state. The like is true of all sciences more or less ; so that no 
one now expects to present any final view of any science what- 
soever. 

Similarly philosophy, theology, metaphysics are only at- 
tempts to understand the universe of reality at large, to frame 
up as it were an explanation more comprehensive than that 
possible to any one particular science. Since each particular 
science deals with only a limited set of kindred phenomena, an 
attempt to handle all phenomena from some one or more 
points of view may possibly be made. Such ambitious attempts 



ECONOMICS IN KANT'S ETHICS 291 

bear the names of philosophy, theology, and metaphysics. It 
is of course just as evident that these attempts can as little 
escape the influence of growth in the knowledge of facts as can 
the particular sciences themselves. 

The Ptolemaic astronomy is an illustration of a principle, of 
a schematization, gone to ruin. Literally every exploded doc- 
trine of science, of philosophy, or of theology presents a like 
picture. We seek explanations of facts or groups of facts ; 
some sort of explanation is seen or devized. Everything possi- 
ble is squeezed into this formula, principle, compartment, or 
schema. It is right to do so ; the more we can cover by it, the 
stronger its hold upon us; for, it represents the most economi- 
cal expenditure of mental energy necessary at that moment to 
understand or to manage the complexity of nature surround- 
ing us. Often to some persons it becomes a finality indeed, 
fixed, unchangeable, unbreakable, as objective as the facts 
themselves. In many cases it becomes in time not an aid 
but a clog or a fetter. New data accumulate which no 
amount of squeezing can force into or under the formula. 
Either the new items are rejected as insignificant, or else the 
walls of the compartments are burst asunder. Thus the patri- 
archal theory of society is spHt into fragments by the hosts of 
facts inexplicable by it. Rather the patriarchal family is now- 
adays seen to be a special result of special causes. Just as 
little could the central position of the earth in the solar system 
resist the pressure of new knowledge. 

Now from any schematic or explanatory idea necessarily 
flow certain consequences, namely, those involved in the very 
meaning or content of the idea. This meaning must unfold 
itself in any new application of the idea, that is, the new 
phenomena and the full content of the idea must cohere. For 
example: If the path of a planet be thought to be circular, 
then other things unchanged, the planet must be found in a 
certain part of the heavens at a given time ; or again, a straight 
line of a given direction must pass through two positions of the 
planet after movement for a given time. If the planet be at 
the predicted place at the time set, then a sense datum, 



292 ETHICS AND ECONOMICS 

namely, a speck of light in one part of the heavens, has been 
connected up with other sense data, namely, the same speck of 
light in other parts of the heavens. So far as it goes, man 
feels that he has in such a case a constraining grip upon real 
things', because from the necessity involved in the explanatory 
idea, he has been enabled to step securely to a new sense 
experience. On the other hand if the planet be not there at 
the appointed time, he is in the presence of another necessity, 
one unmanageable by him. His formal schematic necessity 
has gone wrong. The circular orbit idea must be abandoned, 
or some other correction must be made. 

The above illustration is to be taken as typical of all ex- 
planations whatsoever. We have sense data; necessities are 
involved in them, which are quite beyond control. We have 
connecting ideas, which having a content or meaning have also 
the necessities contained in those meanings. But these two 
classes of necessities are often confounded. Though the formal 
necessity is at bottom a deposition from experience, it acquires 
a kind of independency so as to enable it apparently to oppose 
itself to new sense data — the part rebels against the whole. 
Since the object of science is to thrust schematic necessity into 
nature, that is, to cover over sense data inner and outer as 
completely as possible with explanatory ideas, such that their 
intrinsic necessity shall cohere with that of the sense data, it 
easily happens that theory conflicts with facts; a part of ex- 
perience is opposed to the whole. There are, however, some 
relations so pervasive as those of space, number, similarit)', 
causality and so on, that the above distinction seems difficult 
to hold firmly; the tendency to blurring becomes almost insu- 
perable. Hence the extension of the confusion to other fields 
also. It seems desirable to examine this last position of 
apriorism in order to understand and, if possible, to destroy 
the Kantian contempt of the empirical and of empirical ethics. 

DEPENDABLE REGULARITY AND CONSISTENCY 

As to causality : This lies in the realm of facts ; its neces- 
sity is called physical, mechanical, real ; it is thought to be the 



ECONOMICS IN KANT'S ETHICS 293 

expression of some kind of force. The interaction of material 
things represents real necessity. Commonly we say that bodies 
move towards one another, nothing preventing, under the force 
of gravitation, that a train must move because of the tractive 
force of the engine, and so on to infinity. Thousands of 
fantastic conceits have been woven out of this idea of power 
and of the necessity accompanying it. Numerous distinctions 
are made as regards the manifestations of energy; there is 
electric force, magnetic force, light, heat, gravitation, chemical 
affinity, nerve force, and so on. One of the generalizations of 
modern science is the persistence, correlation, and indestructi- 
bility of physical force or energy. Necessity is supposed, or is 
said, to be the constant bond among the various manifestations. 
Certainty and mystery are with some held to be the character-^ 
istics of external causality. But more and more to-day scien- 
tists tend to avoid all this theorizing of a metaphysical charac- 
ter concerning the nature of this or that force. They tend to 
state the relations between objective facts in descriptive or 
mathematical formulas which shall express in quantitative and 
qualitative terms merely the regularity of the sequence or con- 
nection perceived. The "necessity" becomes merely depend- 
able regularit}^ A new kindred fact not explicable by the 
formula means either that some factor unexpressed in the 
previous formula was overlooked but was constant, or else that 
a new factor must be introduced and its constancy be assumed 
under certain circumstances, or else again a totally new for- 
mula must be sought. In any case finality or metaphysical 
certainty is neither claimed nor expected. 

Consistency may perhaps be taken as the general charac- 
teristic of the necessity involved in the realm of systematic 
knowledge. Every one understands that in the same discussion 
or problem terms must always have the same meaning, or at 
least the same reference ; or if there be variation in application, 
that variation must move within understood limits. Thus the 
word, "circle," can not mean at once a square, a triangle, a 
plane figure whose boundary is everywhere equidistant from 
a given point. Similarly "representative government" can not 



294 ETHICS AND ECONOMICS 

properly be taken as at once a kind of democracy and as an 
absolute despotism. The like is true in general of all terms. 
Failure to observe this requirement is adverse to intelligible 
communication and comprehension. Now every bit of con- 
sistent discussion represents this kind of necessity and finality. 
This sort of necessity is only another name for rationality of a 
certain kind. It is nothing but the coherence of part with 
part, and of part with the whole. Evidently it is quite as indis- 
pensable to a problem arbitrarily set up under fixed conditions 
and presuppositions, as to a system which aims to be a repre- 
sentation and an interpretative explanation of so-called facts 
of external nature. Given the rules of the game of chess as 
concerns board, moves, and so on, then within the fixed condi- 
tions laid down and implied, just so many possible variations 
can exist, neither more nor less. Each move in the hands of 
perfect masters, that is, those who know every possibility, has 
its one best reply. Every game should end in a draw unless 
indeed the privilege of moving first is itself in its results an 
unanswerable thrust. The necessity in chess is an analytic 
necessity, the necessity of identity or self-consistency. The 
conditions, instruments, and processes are fixed or settled. 
Chess games or chess variations are simply possibilities con- 
tained within and unfolded from the rules and the definitions of 
the game. 

Hume sought to dissolve the mysticism surrounding the 
idea and the necessity involved in the causal relation, the 
mystery of how or why physical and other forces must be 
followed by such and such effects. He explained it as some- 
thing resulting from mental habit or custom. He made use 
of the principle of the association of ideas, the principle of 
contiguity — elements of a compound experience recurring 
in consciousness tend to recall one another. He did not 
attack the necessity involved in mathematics. He regarded 
mathematics as analytical. Kant seized upon this point, and 
from this point arose in a sense his famous critical philosophy. 
For Kant regarded mathematics, not as analytic, but as result- 
ing from a synthetic or combining act. It is next to see 



ECONOMICS IN KANT'S ETHICS 295 

how each of these positions may be accepted, and especially 
whether Kant thereby escapes from empiricism into apriorism. 

KNOWLEDGE IS SENSE DATA SYNTHESIZED BY EXPERIENCE 

First it is desirable to emphasize the representative char- 
acter of knowledge, that knowledge is a something existing 
within or inside of the human mind. Knowledge is a mental 
representation of facts, truths, or relations of things which 
exist somehow outside of the mind. Thus astronomy for ex- 
ample is thought of in two aspects : (a) as a complex of inter- 
related things existing quite independently of any human 
observer whatsoever, and (b) as an internal systematic mental 
representation of these things and their relations. The things 
themselves and their relations are not in the mind of any or 
of all individuals; only the pictures or representations are 
there. A chasm is conceived to exist between things and our 
knowledge of them. Thus the image in the eye of the observer 
is not the object imaged, nor is the nervous disturbances in the 
brain either the image in the eye or the outer object imaged, 
nor yet again is the picture before or in the conscious mind 
any one of these things. 

This distinction is clear enough in the case of each new- 
born child. The knowable world existed before the birth oE 
that child; yet in time somehow the child acquires some sort 
of representation of the world. In this case one is sure that 
the child did not produce the external realities. The child got 
knowledge of them because they were in existence before the 
child, and because, as commonly said, they influenced his mind. 
Not merely the child, but every one else feels or learns that 
things are beyond his control. Thus when one places himself 
in certain conditions one can not avoid the resulting sensations. 
Thrust the naked hand into a flame and as a rule a burn results. 
Open the eyes and under proper conditions one must see. 
Here is a kind of physical necessity. Given certain conditions 
as antecedents and something else invariably occurs or turns 
up. This is learning from experience. Commonly we explain 
this by saying that external objects affect us. We communi- 



296 ETHICS AND ECONOMICS 

cate with others and from them learn of things as yet not 
experienced by us. Thus we come to accept that reality is 
much larger than our personal knowledge of it. 

Out of the contact or interaction of consciousness with the 
world external to it arises our knowledge of genuine reality. 
This contact is briefly termed experience. For the individual, 
real experience is a continuous streaming of consciousness, 
with this or that moment stressed by incidents more significant 
than those of other moments. Thus the real astronomy ex- 
periences of each are the recurrence of day and night, of seed- 
time and harvest, the aspects of the earth, of sun and moon, 
and the procession of the luminous points in the heavens at 
night, with occasionally a hairy-like star crossing the vision, 
or a meteor flashing across the sight, these together with all 
other senses impressions direct and indirect, facilitated by 
whatever instruments and processes, spectroscopes, telescopes^ 
gratings, what not, which impressions are combined in the 
theoretical statements and descriptions. Out of these sense 
revelations is built the science of astronomy. A brilliant speck 
seen at night the astronomers tell us is a body a thousand 
times as large as our earth, the sun is an object more than ;i 
million fold as voluminous, and at other bright points are 
objects hundreds of times the volume of our sun. Theoretical 
astronomy is the representation of a system of bodies of un- 
speakable grandeur. Our sense-perceived astronomy, the 
broad varying earth, the dazzling sun, the mildly resplendent 
moon, the twinkling glittering points in the nocturnal heavens, 
these concrete oits of experience are held to be the centers 
of reality and real relations. The formidable representations 
in the books are the picture of what the real may be. For the 
sake of cc nnecting up these bits of sense data the whole science 
has been elaborated. For these it exists, to these it comes 
back. Unless the apparatus permit us to pass securely from 
sensuous moment to sensuous moment, it has been constructed 
in vain. 

Since congruity of the structure with sense experience is 
the final test, it is said here and in all physical science that 



ECONOMICS IN KANT'S ETHICS 297 

experience is the great synthesizer. Medievalists averred that 
there could be only circular paths for the planets, since a circle 
is a perfect curve ; or that the sun could not have spots, for 
these were imperfections, — these and many other such asser- 
tions, but experience furnishes the sense-data which render 
such views untenable. Or with our thinkers, from some 
deduction of theory, such and such phenomena are to be ex- 
pected. Bring the deduction to the test of experiment, and if 
sense does not give back the phenomenon demanded, all con- 
ditions having been fulfilled, a revision of the deduction is 
immediately undertaken. In this meaning then all science is 
synthetic; that is, experience furnishes the facts, the sensuous 
elements, which have to be co-ordinated. Any brand new fact 
such as Roentgen rays, aeroplanes, a new chemical, optical, 
electrical, or other discovery, these stand there together with, 
and just as solid as, the oldest of all known facts. Explain the 
connection of the old and the new as you will, they are here 
in experience, experience has synthesized them. Explanation 
must follow the facts. In this view mathematics are also syn- 
thetic, that is, the sense moments out of which mathematics 
are elaborated are elements joined together by experience or 
in experience; so far, mathematics are empirical. 

AXIOMS AND POSTULATES 

Mathematical axioms and postulates are generalizations of 
experience. Interpretation and analysis of them and by them 
are controlled by present and future experience. The evolu- 
tionist can hold no other view. If at one time the earth was 
so hot that no life as now known could possibly have existed, 
and if now the earth is peopled with millions of genera of 
plants and animals all having a genetic connection, then the 
growth of one form out of another can be conceived only as a 
resultant of accumulated experiences. The literature of evolu- 
tion is the proof. Merely to suggest the process, let us pass 
over all lower forms of life, and trying to recall our own mental 
states as we familiarize ourselves with new fields of thought 
and action, imagine how we rise to the acceptance of the 



298 ETHICS AND ECONOMICS 

axiom, "equals of equals are equal." We proceed as with the 
schoolboy. We retraverse briefly, crudely, the progress of 
the race. The length of two sticks, let us say; — these sticks 
or their equivalents are gone over again and again — not of 
course in racial life on set purposes to ascertain their equality 
— until at last experience has separated from the confused 
plexus of sense impressions the feeling or the perception of 
the likeness or equivalency of the two sticks as respects their 
length. In the growing boy's mind, in the savage's mind^ 
there is here a dim, as it were, embryonic idea of equality. 
Additional trials with a third, a fourth, and other sticks, and 
not merely with sticks, but with multitudinous other sense 
objects, eventually give a clearer and clearer consciousness of 
the idea or concept which we call equality. The axiom, 
"equals of equals are equal," is thus only a phase or aspect of 
the very meaning of the word, equal. The axiom expresses 
tersely, and as if the idea of equality were already fully evolved 
in consciousness, the multitude of testings out of which the 
very idea of equality was fashioned or abstracted. The re- 
peated testings need not be purely sensuous. Every represen- 
tation by imagination, as reproducing a more or less exact 
image of the past, is an additional trial by experience. 

If next the learner drop from consideration all elements of 
the sense experience save only those of magnitude and like- 
ness, and if he set these up as definitely determined facts or 
ideas, and also posit his mode of comparison as a process, then 
clearly the subsequent treatment of any other experiences by 
means of these ideas and processes is nothing else than sub- 
mitting these new data to an analysis, according to the defini- 
tions and axioms laid down. Congruity with the require- 
ments already implicitly contained in the definitions, axioms, 
and processes spells necessity. Consistency in applying the 
terms and so on yields certainty. This necessity and certainty 
are merely logical ; there is nothing mystical about them. 
Notice however that the question still can force itself to the 
surface, namely, how far the new datum actually does submit 
to the tests imposed. The new datum may split the formal 



ECONOMICS IN KANT'S ETHICS 299 

necessity into fragments. That one has here to do not merely 
with system formations but also with relations between things 
is evident from the fact that one can hardly deny that animals 
and plants perceive resemblances and differences; witness dis- 
tinctions made by them between kinds. Nay, leaping the bar- 
riers of Hfe and consciousness, does not every chemical and 
physical reaction or failure to react imply something analogous 
to the perception of resemblances and differences? Yet in 
these cases one raises no speculations about a consciousness 
of necessity and certainty felt by these natural objects. 

With Kant 7 -{- 5 = 12 is a synthetic proposition. Certainly 
in this equation synthetic elaboration somewhere is implied, 
but it is not the synthesis of pure intuition as Kant would have 
us believe. With Kant the mere analysis of 7 and of 5 simply 
as groups of units, and of addition as a combining act, will 
never give as a result the conception of 12 merely as a group 
of units. This is indeed true, but solely because he arbitrarily 
selects only a part of the total experience. The bare formula 
7 -|- 5 = 12 is similar to "equals of equals are equal" in the 
fact that it is merely a ghostly summation of ages of experi- 
ment. Ages passed by before our ancestors elaborated the 
concepts of 7, of 5, and of 12. Witness those savage tribes 
which are reported as not counting beyond 5. One can retrace 
the ages in watching a child's growth in appreciation of num- 
ber conceptions, and of arithmetical processes. By insistent 
repetition, we force the child to acceptance of them. Our 
savage ancestors had to blunder through trial after trial. The 
pile of seven fish when joined with the pile of five fish yielded 
a body of sense impressions, which body again by separation 
gave back the sense impressions of the seven and of the five. 
Thus re-repetitions of such experiences eventually yield the 
conceptions of units, of sum, of 7, of 5, of 12, of equality, of 
addition, of substraction and so on. We to-day have stripped 
these sense deliverances free from entangling elements. We 
have a fixed conception of unit, of the process of addition ; our 
units and symbols are named; our idea of equality is estab- 
lished. To us the mode of number formation has become a 



300 ETHICS AND ECONOMICS 

process resting upon clear analysis. Hence the necessity and 
the certainty imbedded in our very definitions, axioms, and 
modes of operation. We have circumscribed the ideas and the 
methods as fractional aspects derived from experimental treat- 
ment of sense. Infallibly we grind out concordant, necessary, 
consistent results. Put into the hopper what you will, that is, 
try any other matter by the same tests ; so far as this matter 
submits at all to this arithmetical treatment, so far must the re- 
sult cohere with the fixed conditions of the tests. But the 
whole elaborate machinery came from empirical contact with 
the world. For all we can say, further experience may overturn 
the entire structure. To deny this as a possibility, as is done 
in many assertions of eternal and necessary truths, is to thrust 
into the heart of external nature and reality those fixed com- 
partments or concepts which constitute our theories about 
nature or reality ; it is to make reality and our knowledge, that 
is, our representations of reality, to be conterminous. If we 
hold to the fixed compartments or concepts, then indeed these 
necessary truths are in abundance, but they are likewise of no 
startling significance. 

The history of the growth of mathematics, the constant 
rectification of divisional lines, the breaking down of old con- 
ceptions and definitions, the addition of new cogs and motions 
to the mathematical machine, to addition and substraction, the 
processes of multiplication and division; to units, the ideas of 
fractions and operations with them ; involution and evolution ; 
negative numbers ; exponents, integral, negative and fractional ; 
imaginaries ; logarithms ; calculus ; quaternions ; hyperspace — 
all these indicate how definitions, processes, concepts, and rules 
run into problems, when pushed analytically into limiting cases, 
so that the relativel}'^ schematic character of the construction 
is brought to light — to the great advantage of all concerned, 
for the breakdown of a knowledge machine has meant in the 
past an improved tool in its place. 

The like seems true of geometry in all its forms. Our per- 
ceptions of space are empirical and have no other necessity 
in them than that of causality, which latter is an inexplicable 



ECONOMICS IN KANT'S ETHICS 301 

and transcendental mystery according to some, an indication of 
regular dependable connection according to others; a neces- 
sary and inevitable presupposition of all experience according 
to Kant. Our conceptions of space are schematic and are like 
all our other fixed concepts or ideas, axioms, and formulas, in 
the fact that the necessity of consistency adheres to them. 

Our preceptions of space are empirical; at least in this 
meaning that in our concrete sense-life are involved those 
elements out of which we elaborate our conception of space. 
What sort of reality space may have, has been discussed for 
ages. To some it is a kind of real existence or substance-Hke 
thing; to others it is merely a relation, not an independent 
entity; to Kant it is a form, quality, power, or function of the 
human intelligence which forces the human mind to arrange 
its sensations in this order. But that it is not solely a human 
function seems to follow from the actions of animals ; for these 
certainly appear to perceive space relations quite as surely as 
do human beings, more surely in concrete cases. Or what 
shall we say of the space appreciations of masses, atoms, and 
molecules in gravitational, chemical, thermal, electrical, and 
other relations? Man's consciousness seems hardly to have a 
monopoly of space appreciations. True a Kantian may reply 
that these physical, chemical, gravitational, and other space 
appreciations, so far as they are known by us, have already 
been filtered through man's space faculty. Though they indi- 
cate something external to the conscious thinker and inter- 
preter, they are still parts of his knowledge system, and hence 
the spatial perceptions attributed to atoms and to animals are 
only reflex representations made by man himself. Though this 
hardly answers the difficulty, since it does not account for that 
impersonal constancy of relations between those sensuous ele- 
ments from which astronomy, for example, is elaborated, it yet 
may be taken as conceding that we must distinguish between 
conceptions and perceptions of space. In actual life we have 
the persistency of the sensuous elements constituting our 
original experiences. Space as a conception is called in to 
help our systematization of the persistently recurring parts of 



302 ETHICS AND ECONOMICS 

our streams of consciousness. Even though conceptual space 
be a function of the mind, seemingly there must be that in the 
experienced elements which enables them, as it were, to submit 
to spatial treatment. If so, why then may they themselves not 
furnish the material whence the conception may be elaborated ? 
At all events one can see in the developing child a growth 
in space perception. One can watch it in young animals. Some 
animals appear to appreciate distance after a few trials, indeed 
some seem to need no trials at all. These latter are staple 
cases with space intuitionists. Space perceptions seem bound 
up especially with sight, touch, and the muscular sense — 
touch and the muscular sense being final. It would thus seem 
that man builds up his space ideas and axioms out of his sense 
data. Actual trial gives meaning to the proposition that a 
straight line is the shortest distance between two points. Dis- 
tance implies movement and movement means the exertion of 
muscles with the feelings of touch and fatigue. Visual distance 
is deceptive, that is, it is subject to the illusions of perspective. 
Visual distance is tested by touch and by muscle-work. Kant 
will have space pure intuition only, but try to imagine clearly 
and vividly a great distance and your muscles feel the strain, 
you are wearied by the very thought. Your body with its 
motor impulses echoes back and really vitalizes the idea. 
Kant's pure intuition of space is only a distinction which neg- 
lects certain elements vitally connected with the idea. Thus 
that a straight line is the shortest distance between two points 
is the crystalization of countless experiences lived through and 
vaguely compared, so that straight line and shortest distance 
between points are inseparable elements of one whole. You 
can not with any adequacy understand point without under- 
standing line, surface, solid, shortest, straight, curve — all are 
tied together inextricably by racial and individual experience. 
All together they are attempts to express or to represent 
sensuous revelations under certain aspects or abstractions. 

Almost any American schoolboy will show the difference 
between conceptual space and sensuous space, space as studied 
under fixed forms and space relations as realized in actual life. 



ECONOMICS IN KANT'S ETHICS 303 

Watch the American schoolboy on the ball field. He there will 
often show an exquisite perception of space relations in his 
numberless adjustments to meet the changes in speed, direc- 
tion, and distance of the ball, and of the energy needed to play 
his part aright. Place the same persons before a geometrical 
problem and some of even the best of the ball players forever 
remain geometrical blunderers. Thus our geometry is, as it 
were, a conceptual transcript of our sensations. Just as the 
ball player's actual experience may far outrun his power to 
transcribe it in concepts, so doubtlessly the savage who can 
not count five, yet knows the difference well enough between 
five and six. In other words our constructions or abstractions 
from experience are far outrun by experience itself. Evolu- 
tionists conceive this experience to be registered in our or- 
ganism. We are born with spatial perception possibilities or- 
ganized in our nerves and muscular apparatus, as also our 
conceptual powers are likewise transmitted. Hence the ease 
with which this or that animal takes up its space perceptions. 
The necessities of the existence of its kind have forced it to 
such a development. 

Now when we have developed these space concepts, defini- 
tions, axioms, and perceptual processes, we have secured a 
sort of machine. If we hold fast to the definitions and so on, 
we then can evolve all sorts of conclusions from the data with 
necessity and certainty. We are showing consistency merely. 
The formula for the area of a circle is inevitably contained 
within the definitions, axioms, and processes of treatment 
which we admit as allowable. Within these limits the treat- 
ment is in effect analytical. The necessity is that of consist- 
ency. One can not hold the definitions and yet deny the con- 
clusion. 

Lastly a remark upon that other favorite source of necessary 
truths, logic. For two thousand years, the science of logic 
was so far immersed in reality that its form as a mental con- 
struction did not stand out clear. All sorts of psychological 
and other addenda were attached to it. About 1850, the Irish 
mathematician, George Boole, gave a new turn to the problem 



304 ETHICS AND ECONOMICS 

of deductive logic. He applied mathematical modes of treat- 
ment. Philosophers of the old line, authors of text-books on 
logic, with anathemas proscribed Boole's mingling of mathe- 
matics with the old formulas ; yet since Boole's time the result 
has been a complete solution of the problem of deductive 
logic. Symbolic logics of various kinds have been wrought 
out. As a consequence the logic-machine has been in a way 
reconstructed. Under the limitations, definitions and processes 
laid down, one can infallibly exhaust the total meaning of any 
and all combinations of propositions which can enter into the 
machine. The machine is analytic. It gives certainties and 
necessities in abundance, and that too whether the propositions 
deal merely with fancies or with realties, or with a mixture of 
the two. Somewhat similarly with inductive logic. 

GENERAL APRIORISM IMPOSSIBLE 

From the preceding short discussion, we would draw the 
conclusion that Kant's general apriorism fails of its intended 
purpose. Man's ultimate tests of reality lie in sense data. 
Synthesis apart from experience is impossible. It is not a fetch 
by the intrinsic power of the mind. The conception of ob- 
jective biological evolution means the abandonment of the idea 
of fixed mental faculties. Axioms, postulates, ultimate princi- 
ples, are schematic representations of masses of sense items 
lived through by the race. As used their necessity is analytic. 
One is not to be led too far astray by so-called "necessities" of 
thought. One should distinguish between more or less tenta- 
tive propositions concerning real experiences, and these same 
propositions taken as fixed and final statements. Statements 
are merely representative, they belong to the world of knowl- 
edge, to a constructed world. The necessity belonging to this 
world is merely the virtue of consistency. Real experience 
need not conform therewith. So long as the statements give 
back results cohering with experience, one needs not draw the 
distinction between knowledge, that is, systematic representa- 
tive constructions, and real experience. When the systematic 
deduction or necessity as an interpretation of experience is 



ECONOMICS IN KANT'S ETHICS 305 

contradicted by actual life, the system must undergo a change. 
The necessity, the consistency of the system does not pass over 
into nature. Dissolved theories of all kinds make evident the 
need to distinguish between the two realms, actual experience 
and our explanations. Stallo's "Modern Physics" and especially 
the masterly work of Poincare, "Science and Hypotheses," have 
shown the transitory and merely schematic character of the 
profoundest theories of mathematical physics. These theories 
striving to compass growing experience refine intO' truisms-, 
or burst asunder and are displaced by others. Ethical and 
philosophical principles undergo in the progress of time a like 
transmutation and displacement. 

In general, Kant's philosophy, like all philosophy and much 
scientific speculation, simply attempts to push schematic con- 
structions resolutely to finalities concerning real things. Defi- 
nitions, concepts, axioms, and processes are laid down, and are 
then developed to the breaking point. The rival theories of the 
mechanism of biological evolution exemplify over-hasty and 
over-rigid schematism in science; opposed to these, Bergson's 
"Creative Evolution" is a return to a modified time-worn 
schematic idea, having still fewer constructive explanatory pos- 
sibilities. Kant deahng with a mass of such "ultimate" human 
problems shows his greatness in his sweep and mode of treat- 
ment. This however should not blind one to the fact that he 
deals with mental constructs and formulas, which may not 
after all cohere with fuller knowledge; they represent only the 
way Kant conceived the matter. His multitudes of "necessi- 
ties," presuppositions, and postulates may be no more real 
than are the "necessities" of the emanation theory of light,, 
which should have been duplicated, but which in fact are not 
duplicated in nature. 

KANT'S ETHICAL APRIORISM IMPOSSIBLE 

The above appHes to Kant's theory of morals. The de- 
spised empirical must be received. Without an empirical con- 
tent, ethical concepts and principles become mere abstrac- 
tions, identical propositions similar to those to which Poincare: 



306 ETHICS AND ECONOMICS 

reduces many physical science hypotheses, Kant finds certain 
facts and feelings bound up with the ideas of right and wrong, 
in short with the moral law. These facts and feeUngs concern 
all sorts of political, civil, military, economic, aesthetic, scien- 
tific, racial, religious, physical, and cultural relations. These 
relations influence the actual moral concepts of a people. Since 
they are all variable, the concept of duty may likewise change. 
Now Kant has seized one aspect of this feeling of duty, and 
without inquiring into its genesis, has treated it as a fixed quan- 
tity. Even this fractional schematism is so far acceptable. But 
when he annexes this to God, freedom, and immortality, one 
knows from history what to expect ; the representation is no 
longer a schematization of a fragment of life, it is rather con- 
terminous with all reality, — finality is reached at last. The 
result is a would-be stoppage of all progress in thought and 
in knowledge. 

Summary 

To summarize: Kant's schematism of pure reason ftpre- 
sents an unreal economics and an unreal society. Angels and 
their like tenant not merely the earth but the universe at large. 
On the one side you find the social, political, economic and 
other tendencies of his time infecting his thought ; on the other 
side you see him seeking to escape into a super-earthly realm 
where our economics are unknown, there to fashion an ethics 
which shall scorn the earthly needs, or at least rather gro- 
tesquely subordinate them to the celestial fancy. 

At the end you find that the celestial machinery is postu- 
lated only for securing in other realms a condition which is 
so faultily realized on earth largely because of economic in- 
equalities and their consequences. The schematization of a 
fraction of experience, a fraction which disregarded the phys- 
ical and economic, landed in an unreality, since the ethics born 
could not come back to actual empirical life. Let the sig- 
nificant real and economic be evaluated, and a sounder ethics 
must arise. Thus Kant's attempt to compress experience into 
universe-sweeping formulas shall teach us to beware of trust- 



ECONOMICS IN KANT'S ETHICS 307 

ing without reserve to system builders. The real is bigger 
than our formulas. Finalities, even in ethics, are merely 
schematic. We must in real life be content with the rel- 
atively general formulas of our growing positive sciences, 

OTHER ETHICAL SYSTEMS 

If the foregoing ideas be held as good, it is easy enough to 
dispose of all other systems, so far as they assume to reach 
principles not subject to the immediate influence of physiolog- 
ical, economic, and other social necessities. So long as one 
clearly conceives and treats his systematic construct as a prob- 
lem-like schematization, the danger of confounding his conclu- 
sions with the whole of experience is lessened. In such a case 
the more thoroughly and completely vigorous his schematic 
deductions, the better all round. He may unveil possibilities 
of knowledge never yet actually noticed or recorded, but which 
afterwards are shown to be real, as has been done time and 
again ; or contrawise, combinations impossible according to 
theory are found to exist in abundance. In either case progress 
is assured, illusions are destroyed. 

The case is the same with all systems of ethics resting upon 
other ideas of the psychology of the mature individual, as that 
of Porter of Yale, or those of such Hegelians as Caird and 
Greene. These latter abandoning the static presuppositions of 
Kant seek to explain with wonderful words, that the conscious- 
ness of man in knowing and in acting upon objects involves 
as a presupposition man's consciousness and knowledge of the 
absolute or the divine, nay more, man's partial or even fairly 
complete absorption of or into the Deity. Their morality is 
often not far removed from evolutionary ethics, the driver, 
however, is only Kant's angelic static pure reason become 
mobile. In spite of their winged words one plainly sees eco- 
nomic and other needs pulling the puppet strings and that these 
needs are the genuine motors of their spectral parade. They 
too will have a pure universal-reason formula as final in a way 
as Kant's, but their finalities like his land only in inexpHcabihty 
after inexplicability. Apart from religious extravagances of a 



303 ETHICS AND ECONOMICS 

like nature, no other monument to human vanity, conceit, and 
pride can quite equal the modest, the deferential, insistence of 
the absolute philosophers to kinship or even oneness with the 
divine. Well could a German philosopher of this guild be re- 
ported to have said to students in his lecture room, "To-mor- 
row, gentlemen, I will create God." All the while these ab- 
stract philosophers deal with ideas derived from concrete I'fe, 
but what with so much schematic refining, that they at length 
confound or interchange formularies and realities; until in the 
end their consistencies are riven asunder by the progress of 
experience. 

RELIGIOUS FINALITIES 

The like holds true of all forms of religious solutions which 
like Kant's carry us into a world beyond all experience. As 
problem-constructs all these are relatively unobjectionable. 
Only when their schematic character i> forgotten and they are 
turned into ultimate real interpreters of all life do they become 
annoyances, yes, even fetters and clogs to intellectual progress. 
If the history of the relations of ecclesiastical organizations 
with economics were traced out in detail, a remarkable par- 
allelism between changing religious concepts and changing 
economics would be found. The varying conceptions of Christ 
for example throughout the centuries show how pervasive is 
the earthly in molding ideas and interpretations of the divine. 
The "progressive revelation" doctrine of biblical inteipieters 
is a disguised statement of the fundamental dependence of 
jeligious schematism upon economic and social change. If the 
giant abstract Kant, who infinitely more clearly conceived his 
problem than is possible to the majority of even great relig- 
ious teachers, could yet not escape the influence of the empirical 
economic, it is only an easy mental flight to perceive that 
religious institutional development almost of the necessity of 
mere consistency should be surcharged with the earthly mas- 
querading under other names. The confounding of the sche- 
matic with the real, plus the mingling of passions concentrated 
around economic, political, legal, and other social powers and 



ECONOMICS IN KANT'S ETHICS 309 

privileges, is the summary of the myriad years of religious 
ostracisms, persecutions, and wars from every grade of petti- 
ness to the atrocities monstrous, almost surpassing belief, which 
with filthy luridity blazon the pages of history, show vileness 
unspeakable in every grade of evolutionary culture, and mark 
the kinship of savage fetishism with any and all religious creeds, 
whose organizations secure an undisputed dominance, — Egypt, 
China, fndia, Islam, Rome, — the whole furnishing a gloss or 
comment luminous as it were with tartarean flames concerning 
the exaltations of which the higher ethical and religious 
consciousness of man is capable. Disguise it how one may, 
the pursuit of the economic direct and indirect breaks through 
every manifestation of human consciousness ; for consciousness 
can not continue apart from food, clothing, shelter, the creation 
and the distribution of the material means, instruments, and 
products of economic activity. 



CHAPTER VII 

ETHICS AND ECONOMIC DETERMINISM 

Culture and External Resoukces; Ethics, a Special Case. — Funda- 
mental Economic Demands of the Individual Are Necessarily 
Ethical in Bearing; Individual Is a Social Product. — Economic 
Determinism Explains Ethics. — Pre-civilized Ethh.s and Eco- 
nomics — Economics in Justice and the Other Virtues.- Source 
Books for Economic Determinism — How Economics Becomb 
Ethics: Motor Origins Passed Over; Intelligence Primary; In- 
ventions and Environment; Changing Ideals Having Emotional 
Contents; Good; Reason; Dominant Ethical Is Long-Range Eco- 
nomic. — Illustrations: Inventor, Politician, Reformer. — External 
Causes Become Internal Motives. — Contrasts: Kant, Mystics, 
" Voice of God." — Economic Determinism in Other Modes op 
Consciousness: Music, Arts and Sciences, Religion. — Means and 
Ends. — Ideals: Doctrine not Brutal; Excesses of Idealism; Room 
FOR Ideals Left; Proper Ideal to Cultivate. — Definitions of 
Ethics and of Economic Determinism. 
There is nothing new or profound in the observation that 
food, clothing, and shelter are physiological necessities of man ; 
nor is there anything new or profound in the dictum that "man 
doth not live by bread alone." But to numbers in our civiliza- 
tion many new and profound thoughts become manifest in 
seeking to trace the dependence of culture upon food and other 
supplies. As a general question of mere physical and social 
causation, this dependence could be discussed with some 
adequacy in almost any grade of social culture; in this case, 
however, as in nearly all other fields of thought, the theory of 
evolution has led to a sweeping enlargement of vision. Any 
treatment of this question based upon the static grounds of 
some one particular stage of human culture is sure to show 
itself narrowed by the acceptance of ideas or principles as 
"finalities," which are in fact only transitory presuppositions 
of that particular social organization. The majority of man- 

310 



ETHICS AND ECONOMIC DETERMINISM 311 

kind accept without question the views, the habits, and the 
customs current in their time. The origin and the inter- 
relations of these ideas and principles, they do not consider; 
for them, each principle stands upon its own feet as an inde- 
pendent thing. Hence all sorts of hypotheses or explanations, 
presupposing the independency of these principles, acquire a 
vogue and a fixity, which preclude from numerous minds any 
other or more reasonable views. Not merely so for the 
individual but for the multitude, these fixed ideas reflect and 
are reflected in classes, parties, cliques, in all kinds of social 
divisions and combinations along aesthetic, political, legal, 
ethical, religious, and other lines. They determine social 
cleavages, condition every person's struggle for existence, 
embroil clans, tribes, and nations in wars ; they are in fact the 
active mobile causes which playing upon the surface of the 
more stable economic foundation determine in part the im- 
mensely variegated kaleidoscope of human social phenomena. 
The connection of ethics with economics is merely a special 
form of the general problem of the dependence of culture upon 
external natural resources. The foundations of ethics have 
been discussed for ages in every grade of society and from 
almost every point of view. If the variety of principles ap- 
pealed to was made known to the unreflective acceptor of the 
ethics of his own time, he would find the most of the principles 
to be simply incredible. Nine men out of ten on the streets 
to-day embody in themselves blind acceptance of their own 
creeds, and incredulity as to all others. To the biological 
evolutionist, the variety, the blind faith, and the equally blind 
incredulity are transparent, perfectly natural, and readily 
explicable. This is particularly the case with the positivistic 
evolutionist, who finds the mental or the psychic so thoroughly 
interfused with vitalized matter as to be (or scientific purposes 
inseparable from it. Cognizant of no mentality independent 
of matter, he refuses to consider any hypothesis as valid, which 
like that of the spiritualist endeavors to correlate phenomena 
in disregard of their objective material bases. His procedure 
is in no respect a positive denial of the independency of the 



312 ETHICS AND ECONOMICS 

psychic ; he merely plants his feet firmly upon the known. His 
ultimate defense is that none of these independent psychic 
constructs has ever dispensed with material nature for the prob- 
lems of this world ; while its solutions for problems reaching 
beyond the grave are unverifiable, and therefore do not deal 
with genuinely scientific questions. At all events his procedure 
represents a perfectly permissible treatment of a complex 
problem, namely, to exhaust as far as possible the explanatory 
co-ordinating power of known concrete factors. 

Geology and Astronomy pursue the history of our earth back 
to a condition wherein life as we know it could not exist. 
Somehow vitalized matter made its appearance. Plainly here 
by the principle of continuity the objective dominates vital 
phenomena. The moment life appeared, biological evolution 
began ; development results from the interaction of environ- 
ment and living protoplasm. But no man can securely separ- 
ate from each other the manifestations of life and of mind. 
Life, so far as man knows it, is impossible without oxygen, 
hydrogen, in short, without the entire chemical process where- 
by the body incessantly dissolves and renews its elements bv 
the acts of feeding and of excreting. Again by the principle 
of continuity the objective preconditions and dominates the 
subjective. Hence for the positivistic evolutionist, ethics as 
an output of spirit, becomes a biological efiflorescence. It can 
root and find solid sustenance only in physical and physiological 
necessities. 

Food, clothing, and shelter then are primary needs of man- 
kind. In favorable climates shelter and clothing may be an 
almost negligible matter. In these respects man might there 
dififer but little from the brutes around him. This is the case 
at present with thousands of savages and barbarians in the 
tropical zone. However many centuries the race continued 
in this state, or however many tribes are yet not far removed 
from such a condition, man must have food, and in frigid and 
temperate zones clothing and shelter also. Now the procure- 
ment of food, clothing, and shelter constitutes even to-day 
nine-tenths more or less of the economic demand of nine- 



ETHICS AND ECONOMIC DETERMINISM 3U 

tenths more or less of the human race. From this it follows 
inevitably that to-day the conduct of the huge majority of 
mankind is determined by economic considerations. If nine- 
tenths of the efforts of nine-tenths of humanity are for primary 
necessities, these efforts must fall largely within the class of 
conduct called ethical. Otherwise ethics are no longer ethics, 
that is, practices, beliefs, judgments resting upon such and 
such principles are not akin to practices, beliefs, judgments or 
other men resting upon Hke principles though differently con- 
ceived and limited. Doubtlessly conceptions of ethics which 
deny morality to savage and barbarous tribes are expressed. 
But this can only mean a disregard of the principle of con- 
tinuity in reason and in science ; it means satisfaction and 
isolation within a rather narrow abstraction, the substitution 
of a formula in the place of concrete Hfe, the part is taken for 
the whole. 

Each human being must as living physical tissue satisfy the 
natural demand for food, clothing, and shelter. But this in- 
dividual is much more than a piece of individualistic pro- 
toplasm. Quite as deep-seated in his social origin. It is a 
mere fact that each man is the surviving result and product of 
a million-fold care and effort of others. Utterly imperious is 
the demand for social, and if you will, for sexual relations. It 
is perfectly true that many phenomena make this social side of 
each seem less intrinsic than the purely personal aspects. Yet 
if one consider the matter closely, one must concede the differ- 
ence to be less than at first sight appears probable. The in- 
numerable social cares of others, without which the race would 
perish in a generation, the insistent demands of the suckling 
babe for nourishment and care, its continuous growth and 
training throughout childhood, and the outburst of sexuality 
as puberty comes on, all indicate that however conscious man 
may be, in him the instincts of life surge to expression as surely 
as in the lower animal world. It can not be otherwise if the 
race is to go on. Each man is a racial, a social product. His 
sociality is not less completely stamoed into and upon him 
than are his spatial and temporal separateness. 



314 ETHICS AND ECONOMICS 

Our demands for food, clothing:, and shelter are not less 
social than individualistic. Not for self alone but also for wife 
and child do we pursue physical necessities. Often indeed in 
higher cultural stages the demands of our social selves for 
these requisites far exceed our private demands. Our private 
selves seek food in order to continue our personal existence. 
When the personal desire fails, we readily enough relinquish 
the quest and pass out of life. Much oftener, it seems, our 
social selves make the quest for food and dominate the personal 
view, because of the overpowering influence of the social siae, 
which seemingly will not endure the thought of wife, babe, 
relative, or even tribe, exposed to the stress of the struggle 
for existence unaided by our endeavors. Thus then the pur- 
suit of these fundamental human goods, these physiological 
necessities, which constitute nine-tenths of the economic de- 
mand of nine-tenths of mankind, expresses human nature and 
becomes a motive which outweighs in massiveness and per- 
sistency all other real concrete motives. It is unavoidable that 
about this demand and this pursuit as an abiding core, all other 
motives should assemble and concentrate. Ethics, whatever 
this word may mean, can not represent a merely decorative 
fringe of these ultimate needs, a something apart from and 
above them all. On the contrary it must spring from and in- 
terfuse with this innermost tissue of life relations. The pursuit 
of food, clothing, and shelter is so overmastering, so all-en- 
grossing that the relations under which the pursuit is made 
maist constitute a bulk of usage and custom essentially ethical 
in character. One can not regard any other relations as more 
intrinsic or more important. Hence if ethics has to do with 
any matter of real social importance, it must concern itself 
with the fundamental economic and material demands. As a 
matter of fact these demands do constitute the bulk of the 
real external content of all ethical systems however crude or 
refined the system may be. 

Though food, clothing, and shelter are the fundamental 
economic demands, it is not to be inferred that this representa- 
tion exhausts the meaning of economic, and more particularly 



ETHICS AND ECONOMIC DETERMINISM 315 

the meaning of the broad doctrine of economic determinism. 
Marshall, the standard English economist, tells us that "eco- 
nomics is concerned mainly with such incentives to action and 
resistance to action as can be measured, at least roughly, in 
money terms." Economics is often referred to as "the science 
of wealth" or "the science of business." Wealth is defined 
more or less accurately and frequently as material goods, and 
with some writers, as personal services also which satisfy 
human wants and human desires. If these ideas be combined 
more or less fully under the name economics, there is scarcely 
any human activity conceivable which is not directly or indi- 
rectly tied tightly to economic considerations. Further a 
commonplace of economics teaches that the science searches 
for and tries to formulate tendencies, mass-phenomena, long- 
range results. The individual case is usually so complex and 
intricate that rules or deductions concerning the individual 
can not be evaluated. Entirely of the same piece is the direct 
economic when compared with economic determinism. Eco- 
nomic determinism considers not only the direct economic 
motive as a short-run money motive ; it considers also long- 
range efifects and consequences ; it considers the influence of 
climate, machinery, tools or implements as determining the 
economic struggle ; it considers the psychology of the con- 
testants both as a cause of economic consequences and as a 
result which issues in further economic effects. For example 
politics and law both national and international are nowadays 
quite frequently acknowledged to be determined very largely 
by economic forces. But it is equally clear that positive law 
and political action determine social and individual psychology 
in many directions. These in turn are fraught with many 
social and individual economic efifects. Herein is had a con- 
tinuous exhibition of reciprocal causation. But the fundamen- 
tal driver in the mass determination of these results is physical 
and physiological necessity manifesting themselves in the field 
of present-day consciousness more or less under the guise of 
the economic motive. This is the essence of economic deter- 
minism. The object of the present chapter is to show that 



316 ETHICS AND ECONOMICS 

ethics as a mass phenomenon is explained by economic deter- 
minism. Ethics is largely transfigured economics. 

PliECIVILIZED ETHICS AND ECONOMICS 

Conceive man emerging as an anthropoid from the brute 
stage. At that time he might perhaps have formed more or 
less large hordes such as do monkeys, or he may have been in 
smaller groups such as the gorilla and the orang outang now 
form. At all events clearly it is inconceivable that his in- 
dividual and social pursuit of life necessities, that is, his ethics 
and his economics should have been like those of to-day either 
externally or internally. This human brute however must 
have progressed. One finds in every continent the world over 
that many tribes went through a period called the matriarchy. 
Here woman dominated in a way. Since the society was 
essentially a blood tie, and since mothership is always certain 
while fathership is always possibly questionable, social divisions 
and arrangements rested in large part upon physiology. Still 
these peoples never escaped from the pressure of physical 
needs. Accordingly their modes of satisfying these needs, in 
short their economics and their ethics, must have differed large- 
ly from ours. The like is true of a people essentially pastoral, 
essentially agricultural, essentially military, essentially handi- 
craft-industrial, essentially large-machine industrial. Hence 
the ways and the means of securing food, clothing, and shelter, 
as also the possible religious, aesthetic, and cultural develop- 
ments can not be other than quite variable. 

Human vanity (so it seems) has in all ages caused numbers 
to claim for man a divine parentage and quality. Clearly how- 
ever in this life physiological needs precondition any manifesta- 
tions of the spiritual. It follows that where the struggle to 
secure the mere necessities of life is all-absorbing, habits, cus- 
toms, morality, religion, culture, so far as these have then any 
existence at all, can not possibly express anything else than 
aspects of this contest. And when by contrast the refinements 
of the profoundest culture turn out to be only etherealizations 
of this same primary battle, as was seen in Chap. VI in the 



ETHICS AND ECONOMIC DETERMINISM 317 

case of the great Kant, one is prepared to accept some form 
of economic determinism throughout all ethics. Hence it is 
no surprise to the evolutionist, who conceives man as climbing 
up from the brute, to find that in savage communities, religion 
commingles ignorance, fear, superstition, magic, the crudest 
and crassest beginnings of science and metaphysics, in a veri- 
table hodgepodge, of which each and all parts are concerned 
with the maintenance of physical existence through proper 
suppHes. Arrange savage tribes in an ascending order of cul- 
tural development, or in such an order as they may be con- 
ceived to have gone through in the actual progress of the race, 
and you always find that the growing refinement of religious 
ideas runs parallel with the course of economic development, 
the securing of a more dependable supply of material goods. 
As inventions or changes in the social organization of the 
economic pursuit occur, more and more of the tribe are re- 
moved from the immediate relentless pressure of physical 
needs. Hence religious ideas become more abstract and their 
causal relations with phenomena more remote and indirect. 
But in no case do they ever abandon their economic base. 
One sees this base everlastingly throughout all savage cul- 
tures, throughout all the great religions of the earth — Hindu, 
Chinese, Persian, Greek, Roman, Jewish, Mohammedan, Chris- 
tian — down to our own day, when a Pope Leo can delicately 
touch the economic chord in writing: "Christian morahty, 
when it is adequately and completely practised, conduces of 
itself to temporal prosperity, for it merits the blessing of that 
God Who is the source of all blessings;" [italics ours]. From 
the most primitive origins, when ignorance and the pressure of 
economic needs were the inner obstructions and the drivers of 
human life, race maintenance was hemmed in on all sides by 
magic, by superstition, by falsely conceived causal relations; 
in a word, religion, that is, those elements which finally 
coalesced into the religious concept, has from the very first 
through the wily ignorance of wizard, medicine man and 
priest pervaded and mightily influenced every form and 
aspect of the struggle for existence. 



318 ETHICS AND ECONOMICS 

The like is of course true of ethical and scientific concepts. 
Religion, ethics, and science have always mingled more or less 
inextricably — they do so to-day — but easily in the primitive 
forms of the struggle for life the fundamental instincts break 
clearly into manifestation; ethical concepts are then nearer t-;> 
their economic determinants. Thus a nomad people in a 
sparsely-producing region easily abandon their sick, their in- 
fants, their aged ; these are incumbrances to the pursuit of food. 
The Esquimaux in their niggardly ice-bound habitat know very 
well how to keep down population by artificial means less deli- 
cate than those recommended by Malthus. Where instead of 
a roving hfe some form of agriculture is practiced, or a more 
settled pastoral existence is maintained, the value of the aged, 
of children, of women undergoes a change, or slavery becomes 
a possible institution. Where a race lives largely by plunder- 
ing from their neighbors, female children may be little es- 
teemed, female infanticide is common and is uncondemned. 
Under other productive conditions and with maternal rule, 
woman rates higher in value than man. Peoples in certain 
climatic conditions, and where women are relatively few in 
numbers, may find polyandry an acceptable practice; where 
nature is fecund and life is easily supported, the utmost sexual 
freedom may prevail. Amid relations where tribal solidarity 
is absolutely necessary for tribal existence, intra-tribal truth, 
mutual aid, and reciprocal service are preconditions of survival, 
while untruth, all sorts of deceit, guile, cruelty, and treachery 
towards outsiders are not merely permitted, but are also re- 
garded as highly admirable. Tribal hostility — every stranger is 
an enemy — through every grade of social development survives 
to-day in the contempt which the native of any country usually 
entertains towards the foreigner. Patriotism is for the multi- 
tude this same feeling with a few better fringes put forward 
for outer inspection. 

The variations of the combinations of all these elements are 
infinite in number, because life even to the savage is an infinite- 
ly complex alifair. The external forces and conditions deter- 
mining existence are innumerable ; the possible modes of inter- 



ETHICS AND ECONOMIC DETERMINISM 319 

preting and combining them are uncountable. Hence the as- 
tounding variety of forms and shadings in savage, in senii- 
civihzed, and in civilized life. But through them all as the 
ground-tone of the entire chorus of life in all stages of culture, 
rings the cry for food, for clothing, and for shelter; and next 
for all other tones of pleasant consciousness that can be super- 
posed on the fundamental notes. From the savage who in- 
vokes the magic of the spoken word to curse or to bless, from 
the mystery of the unfamiliar which therefore mast be propiti- 
ated, from him who beats or even discards his fetish which has 
not brought him good, onward to a wily Jacob who sharply 
drives a bargain with his Deity, up to the subtle confusions of 
natural and divine law as exhibited by Pope Leo, the case is 
ever the same : Transcendentalism, as commonly manifested 
throughout the centuries, with a sort of vulgarity contemptu- 
ously scorns but yet can not possibly subsist apart from the 
empiricism, by means of which and upon which it as a rule 
parasitically feeds. 

It is impossible to give adequately in a shoit chapter even 
a sketch of the historical details belonging to the above. The 
data for the conclusion are to be found in great abundance in 
such works as Herbert Spencer's "Ethics" and "Sociology," 
and especially in Westermarck's monumental volumes on "The 
Origin and Development of the Moral Ideas." No discussion 
whatsoever on ethics and economic determinism is worth a 
moment's consideration, unless the facts presented in such sur- 
veys have been critically estimated. The present chapter aims 
only at the general outlines of the subject. However, just to 
suggest more fully the extreme closeness of the relations of 
ethics and economics, it will consider with a little detail the 
economic aspects of the great virtue, Justice, so often and so 
eloquently said to be the foundation of the universe. This 
done, one is better able to feel and tO' perceive in other virtues 
economic relations not so much in daily evidence as in Justice. 
In order not to overlook important shadings of Justice, the 
main outline of Sidgwick's discussion of "Justice" in his 
"Methods of Ethics" will be followed, and along the route 



320 ETHICS AND ECONOMICS 

hints or suggestions as to economic connections will be ap- 
pended. 

ECONOMICS AND JUSTICE 

What then is Justice? An exact answer to this question is 
not easy. All moral ideas are difficult to define because (a) 
the content of concrete morality is constantly changing; hence 
(b) the Hmits of any and all virtues are fringed, indistinct, or 
over-lapping. Thus for example with the Greeks Justice in- 
cluded not only the particular virtue called Justice, but also in 
some sense virtue in general. Confining ourselves with Sidg- 
wick to the special virtue Justice, ' one meaning of Justice is 
conformity with law. We speak indifferently of law courts or 
courts of justice; just rights are those enforceable by law. 
Still, not all violations of the law are called unjust, for example, 
dueling and gambling; and again at times from our notion of 
justice we pronounce some laws just and some unjust ; and 
thirdly, a part of just conduct is thought to lie outside of the 
sphere of law, such as a father's relations to his children.' So 
far Sidgwick. 

Now for some economic aspects. Take a code of laws, 
Blackstone's for example, turn through the chapters of his 
four volumes, what do you find? economics, economics, eco- 
nomics. Either the naked economic applied to the indi- 
vidual as in property relations ; to the class, that is the 
king, the clergy, the nobility; or to the public welfare, as in 
national defense ; or it deals with instrumentalities as courts, 
their forms, powers, processes, securing, changing, or con- 
trolling possession. If you consider the part devoted to the 
naked economic over against the rights of security and of 
freedom, you will find the latter a very small fraction of the 
former, and even these seeming non-economic relations are 
constantly estimated in economic terms. Further, however, the 
mass of this non-economic legislation is indirect economics. 
Thus murder, assault, false imprisonment, slander of magis- 
trate or of individual and so on, these are either a subversion 
of the fundamental of all economic pursuit, namely, life itself, 



ETHICS AND ECONOMIC DETERMINISM 321 

or they are impediments rendering that pursuit harder, or 
they are part of class legislation wherewith the few are fur- 
ther favored, cr they deal with the maintenance and economic 
welfare of the nation as a whole. The like is true of the 
Code of Khammurabi, 4000 years older than Blackstone's. 
When you ponder these facts for a time, you will understand 
with sun clearness that the ethics of Justice, "as conformity 
with positive law" is horns, hide, hoof, and all between, noth- 
ing but economics. If dueling and gambling be not unjust 
according to some, they do not cease to have economic causes 
and consequences ; gambling has but a faded charm if no 
economic gains or losses are connected with it, while the class 
and social status and hence the economic condition of the 
duelist can readily be imagined. That we pronounce some 
laws just or unjust means only that we often deliver judgment 
because of a changed economic view. Or again that some 
sort of justice exists beyond positive law as that between 
children and parent, this may mean that ideals resting upon 
and looking to different economic bases and results are before 
our minds. That children are entitled to the joys of childhood 
means at least the dispossession of the old idea that they were 
merely property such as bow, beast, slave, or wife. Nor did 
this purely benevolent sympathetic appreciation of childhood 
spring from merely abstract immaterial considerations. Be- 
fore it could grow up, a certain economic sufificiency had to 
be reached, out of which and because of which a psychology 
could develop so far as to see that greater economic and other 
efficiencies are obtained by giving a fuller growth to the child. 
In fact when you fully weigh the connection between positive 
law and economics it becomes a truism tO' you that legal justice 
is completely pervaded by economics, so that it were almost 
mere surplusage to continue the discussion along this line. 

In view of the difiference brought out between justice and 
conformity with law, Sidgwick next seeks to find 'what laws 
conform with or realize justice. Is it that those laws are just 
which define the rights of individuals? But this test does not 
cover the case; for (a) we have laws dealing with taxation. 



322 ETHICS AND ECONOMICS 

public burdens, privileges, and punishments ; these we hardly 
call "rights" of individuals; or (b) shall we say that just laws 
distribute to individuals, objects of desire, liberties, privileges, 
hindrances, restraints, or even pains as such? or (c) since fail- 
ure to make a just distribution occurs so frequently, shall we 
say perhaps that Justice ought to be realized in the distribu- 
tion'? 

Now however one may finally conclude concerning the fore- 
going ideas, it is still clear that in mass the matter here is 
turning upon economics and mostly those of the naked direct 
sort. Whatever rights of persons in general may be, the 
rights to a just share of taxation, public burdens, privileges, 
objects of desire, liberties, and so on, are clearly economic in 
cause or consequences. Even the distinction between correc- 
tive and distributive justice, between punishments and assign- 
ments of positive good, does not get aw^ay from objects of de- 
sire, and from methods and processes of social organiza- 
tion of the pursuit of these objects. 

Sidgwick is led to distinguish between 'ethics as pertaining 
to individuals and politics as pertaining to social regulations. 
Now ethics is thought commonly to declare that private per- 
sons should obey all laws whether just or unjust, if established 
by lawful authority. This idea recurs every day in our own 
judicial and other governmental systems. Still we nardly ac- 
cept this proposition v/ithout limits in practice. Because we 
are often enough in the position that we seem ready to accept 
the punishment, provided we may thereby break the law. Or 
the theologians tell us that a higher right overrides the lower, 
and therefore there may be laws which we are bound to- 
disobey.' 

Again however one dispose of these problems, one can 
readily see economic reasons behind the rule that all private 
persons should obey the laws just or unjust. It is a case of 
class rule. It is always to the interest of rulers that they re- 
ceive willing obedience. They therefore inculcate the psy- 
chology of submission. They can thus much more easily and 
economically maintain their position. All history is a con- 



ETHICS AND ECONOMIC DETERMINISM 323 

tinuous proof that the governing classes will see to their own 
material interests. They will glorify religion, culture, and all 
the amenities, but they will likewise see that their class secure 
a distribution of products so that their members shall obtain 
the material economic means to enjoy that highly prized cul- 
ture. In truth politics and "applied ethics" must of necessity 
deal mostly with external circumstances which register them- 
selves in material, tangible, visible results. They therefore 
can hardly fail to be dominated by the pursuit of food, clothing 
and shelter. 

Still searching for the marks of legal justice Sidgwick next 
hits upon ' equality as the exhaustive test. Thus taxation 
would be perfectly just if it imposed exactly equal sacrifices 
upon all. This at first sight seems excellent, however hard to 
determine the limits of equal sacrifice. Slill if this were the 
true test, what then becomes of special privileges and bur- 
dens? We hardly think it unjust to exempt women and not 
men from army service. We do not always think special 
privileges are unjust. Hence the equality idea attunes itself to 
the thought that it applies to any of the class specified in the 
law. This narrows greatly the equality test. It admits in 
theory all sorts of class dominations, — a fact of world-wide 
experience throughout centuries, — equality within the class or 
caste, superposition of class and caste upon class and caste. 
But even within the class, equaUty must turn upon significant 
distinctions. An inequality that appears arbitrary and for 
which no sufficient reason can be given is seen to be unjust, 
whether in laying down the law or carrying it out'! 

Once again in all the above, however decision may fall, we 
are still following economic determinants. Equal sacrifices — • 
how wide is the swathe cut by "sacrifice" in past and present 
economic treatises! Then too, special class and other privi- 
leges, exemptions from services of certain kinds, restriction of 
offices and powers to certain favored persons supported usually 
by visible wealth, are in determining mass only economic. 
And what constitutes the distinction between essential and 
arbitrary differences? What constitutes "a sufficient reason" 



324 ETHICS AND ECONOMICS 

for legal inequality? The answer to this will in the main turn 
out to be matters essentially economic. 

Sidgwick then goes on to consider 'that part of just conduct 
which Hes outside the range of law. He observes however 
that even here the notion of Justice always involves distribu- 
tion of something considered advantageous or disadvantageous, 
whether money, or other material means of happiness, or 
praise, or affection, or other immaterial good. This aspect 
of Justice outside of law leads to the seeming overlapping of 
the virtues; thus affection, love, and kind services appear to 
belong to Benevolence. Yet in other ways these things seem 
to belong to Justice, for example, it is just that equal love and 
affection be given to all of our children. This leads to Justice 
as impartial treatment, and to the satisfaction of reasonable 
claims. But of course the next thing is what are reasonable 
claims. Well, of these the most obvious seem to result from 
contract. Contracts are to an extent enforceable by law, but 
it is thought to be just to keep engagements generally even 
though no legal penalty attaches to violation. Under binding 
engagements are \erbal promises, implied contracts, or tacit 
understandings. Tacit understandings are difficult to keep 
precise ; they vary from a positively implied pledge to mere 
knowledge of expectancy. But it becomes doubtful whether 
one must dispel all erroneous expectations on the part of others 
on peril of being required to fulfil them. Still if the expec- 
tation be natural and such as most persons would form under 
circumstances, there seems some sort of duty to fulfil it.' 

'Or more generally we ought to fulfil such expectations (of 
services, etc.) as arise naturally and normally out of the rela- 
tions voluntary or involuntary in which we stand towards other 
human beings. Many of these duties appear peculiarly strin- 
gent and sacred as for instance those belonging to domestic 
relations.' But Sidgwick had previously found that of these 
even the most certain and indisputable were difficult to define, 
while there were others imposed only by varying and apparent- 
ly arbitrary customs. So long as these customs persist, expec- 
tations springing from them seem natural and normal and 



ETHICS AND ECONOMIC DETERMINISM 325 

hence there is a kind of justice in fulfilling them. But the 
obligation can not be complete, 'because (a) customs are al^ 
ways varying, and (b) some customs become unreasonable, 
which therefore are "more honored in the breach than in the 
observance." ' 

Thus there arises confusion in the term Justice. Ordi- 
narily we think of it as definite, exact, precise, but when we get 
to customary claims, we come upon haze and dimness. Man 
however is a creature of custom and habit and he will expect 
others to continue in much the same direction as they have 
previously gone. Therefore when any sudden change takes 
place in their actions, he feels himself wronged ; sometimes he 
even gets legal redress for claims originating in this manner, 
as a right of v/ay over land without express permission of the 
owner. But decisions vary largely. If a poor man quit a 
tradesman because of a change in religion, we hardly think he 
does injustice. If a rich man in a small country town does the 
like, we are apt to think it unjust persecution. Similar results 
are found even within the range of law. If a constitutional 
government change its policy without notice, or if it vary much 
in its poHcies, people are apt to feel themselves unjustly treated 
because they yre afifected in their economics, their investments, 
trade, professions, and at times they even demand and secure 
compensation. Still outside of law the test of natural or nor- 
mal expectations, that is, custom and precedent, has some 
validity. But we can not carry this too far, otherwise no old 
law and no old custom could ever become, or be, unjust,— a 
position contrary to all history.' 

'Perhaps we may hold that the customs may grow out ot 
other elements of the social order, independent of and possibly 
conflicting with laws, and hence rules going counter to these 
natural expectations are unjust. On this ground many hold 
primogeniture unjust, the inequahty of inheritance seems para- 
doxical and harsh.' SIdgwick concludes the above discussion 
in effect thus— 'natural expectations as a notion is worse than 
indefinite, it contains an ambiguity concealing a fundamental 
conflict of ideals— it thinly covers the chasm between the idea! 



326 ETHICS AND ECONOMICS 

and the actual ; it means (a) the universal and normal as op- 
posed to the exceptional, (b) the prim't!ve as opposed to latter- 
day conventions, (c) the actual as opposed to the ideal, (d) or 
by some taking nature as God in intention, it is man's purposes 
over against the divine will.' 

As to this long summary of Sidgwick's discussion of Justice 
outside of law, one needs remark but two or three things, (a) 
Almost all illustrations used by Sidgwick to give concreteness 
to his representations are taken from economics, or from eco- 
nomic relations : tor example, contracts, services, rights of way, 
shoptrading, investments, effects upon trade, profession, resi- 
dence, compensation, primogeniture, and so on. A moment's 
consideration shows that this can not be otherwise. Relations 
concerning material things are comparatively definite, objective, 
measureable. Rights concerning such things may become 
relatively tangible or palpable. Relations concerning feelings 
can not be thus so readily objectivized. Only when such emo- 
tional relations are capable of an objective estimation of a 
permanent character do they get recognition. Feelings vary, 
change, adapt themselves. Psychology is a self-adjusting 
mechanism, as it were. Relations between real things remain 
approximately stable. 

(b) The justice of natural expectations outside of positive 
law means at bottom the question of the origin of customs. 
Nowadays law tends to statute law ; formerly all was custom. 
The causes of the customs of olden times can be nothing unlike 
those acting to-day. The same general conditions exist : ma- 
terial nature and its products, phable human psychology, per- 
sistent biological necessities, and their unescapable pursuit. 
To-day laws are changed because of economic pressure direct 
or indirect. Examine the Magna Charta, the Declaration of 
Independence, Blackstone, or a revised code of to-day. Or 
consider the urgent political questions: conservation, reci- 
procity, tariff, banking reform, initiative, referendum, recall, all 
are with overwhelming preponderance economic in origin and 
destination, a better production and distribution of material 
goods. The problem is in one aspect exactly the same as when 



ETHICS AND ECONOMIC DETERMINISM 327 

the handicrafts established customs, or, as did feudalism, or 
aristocracies. Customs change to-day, not simply ana solely 
from pure-reason developments, rather almost solely because 
interested reason discovers better ways of mastering nature, 
material and mental, for the advantage of this and that person 
or group of persons. This is at least the main fact in the 
past. It is possible that the future may reach a wider range 
of economic considerations, which yet will not then cease to De 
economic even when they may have ceased to be quite so 
selfish as to-day. 

(c) The distinction between justice as actually practiced 
and ideal justice, — this too does not carry us beyond economic 
relations, and mto the realm of pure reason and unearthly aspi- 
rations. Ideals themselves are constantly changing; they are 
indeed nothing really different in origin from customs, prec- 
edents, natural expectations. They are previsioned better rela- 
tions within the present physical life connections. Such an 
ideal every old custom once was, a vision faint and dim in some 
old thinkers head, worked out into reality by means of imita- 
tion conscious or unconscious, by changed implements, or 
changed social organizations. The like occurs to-day. The 
like is to be expected, so long as man remains a biological 
phenomenon, so long as survival rests upon the continuous 
adjustment of outer and inner relations, so long in short as man 
must seek economic goods, food, clothing and shelter, 

'This view of the ideal however is too contracted by far for 
some thinkers, therefore we find all sorts of system builders 
evolving by abstraction various mental constructions, ideal 
societies which are to realize all justice and all virtues. Plato 
gave such a construction. Sir Thomas More another, and be- 
fore and after him, dozens of others, socialistic and otherwises, 
have been framed. These types of perfect societies may be 
of all sorts. A caste society may think of perfecting a caste 
system, or there may be conceived the perfect warlike state, 
the perfect industrial state, or one devoted to the pursuit ot 
art and science, or to a just distribution of rights, privileges, 
burdens, and pains to "human beings as such." All these may 



328 ETHICS AND ECONOMICS 

and must deviate more or less from actual arrangements. 
Some thinkers however are content to obtain for all men the 
natural rights, the right of personal security, the right to hold 
property and to dispose of it freely by contract, the right to 
marriage and family relations, the right to labor, the right to 
education, and political rights. While many thinkers would be 
content to obtain these for every one, rehgious thinkers shift 
ground and invoke also the ideas of Divine Justice and the 
doctrine of immortality as compensation for present inequali- 
ties.' 

Now none of these imagined social structures escapes eco- 
nomics, the fact rather is that the primal ground-motive of each 
of them is economic. A caste state perfected is only a per- 
fected mode of organizing the production and distribution of 
goods so that the upper classes may get all possible benefits. 
An industrial or warlike society, an arts and science society 
must traverse the whole field of economics, — for on earth man 
can not get forward without attending to real physiological 
needs. Until man shall have shufifled off his original proto- 
plasm it is simply an academic problem to construct states 
apart from earthly needs. The ideals are mere Utopias. 

The natural rights so-called are simply economic relations. 
The right to personal security, — without this generally main- 
tained for all, we are back to the war of all against each, each 
against all, the original emergence of man from the brute. 
This fundamental of all social life is at the same time the cor- 
ner stone of economics ; the two are here one. The rights of 
property and of free contract are nothing if not economic in 
origin and result. The right of marriage and that of family 
society, — history shows these rights to vary with the economic 
organization of society, they change greatly in form and sig- 
nificance according as social production is dominantly hunt- 
ing and fishing, pastoral, agricultural, military, commercial, or 
industrial. Apart from these things it is mere physiology. 
The so-called right to labor is but an aspect of an economic 
condition. Some shut ofif others from access to the means 
of existence ; — very well — the right to labor means that the 



ETHICS AND ECONOMIC DETERMINISM 329 

possessors are at least bound to furnish non-possessors a 
chance to work for a Hving, otherwise the right of posses- 
sion is apt to perish in a "brutal revolt against the possessors." 
The right to education means greater efficiency ; witness trade 
schools, manual training schools, vocational studies and so on. 
Political rights, — an economic cause and consequence. Only 
by political rights can the economic independence of large 
masses be secured, — at least it is so thought. But this doc- 
trine is not based solely on generalized sympathy for a human 
being as such. It is a half-cant, a half-truth belonging to the 
members of the ruling class or ruling race. Witness the atti- 
tude towards dependant conquests. Witness dependencies 
the world over. "White man's burden" is a stock phrase, — 
"white man's burden" and "the yellow peril" are kindred con- 
ceptions. 

"Many have sought to combine those rights as corollaries 
under one principle, namely, freedom. Freedom from interfer- 
ence is held by many influential thinkers tO' be all that human 
beings owe to one another apart from contracts. The pro- 
tection of freedom is the sole proper aim of law. The equality 
that Justice aims at is the equality of freedom." 

Now however well or ill this formula may cover the various 
possibilities, manifestly when one descends from abstractions 
to concrete cases, actual circumstances govern the interpre- 
tation of the word. Thus it is necessary to restrict the free- 
dom of children, idiots, the insane, and criminals. It is often 
contended that this freedom must be restricted for the majority 
of mankind because of their intellectual weakness, and that it 
does not apply to adults in a low stage of civilization. But why 
restrict the freedom of children but for direct and indirect 
economic reasons. And the exclusion of adults in lower civili- 
zations, what is this but class legislation, class rule, " White 
men's burdens"? Of course the savages of Africa, the barbarians 
of the seas are restricted for their own good ; there is nothing 
economic in the relation ! Spain gutted the West Indies for the 
glory of God, for the Roman Catholic faith, and it sweated to 
a speedy death thousands and thousands of Indians for gold, 



330 ETHICS AND ECONOMICS 

Christian glory, and God! It is this high conscientiousness 
which urges Germany, France, Great Britain and the rest to 
divide Africa, Asia, and the entire globe ! They do not seek 
gold or economic advantages ; it is all for lofty abstractions and 
freedom springing from pure reason! 

'Again does freedom mean absence of physical constraint 
merely, or of other modes of interference, say, with well-being 
and comfort?' But one easily sees the economic groundwork 
of all this. The development of this demand for treedom from 
annoyance is an outcome in part at least from economic 
change. Man pursues wealth for the extension of his powers 
and enjoyments; greater wealth means the extension of the 
uses of wealth. New desires thrive because they have what may 
feed them. Thus freedom from annoyance roots in economic 
soil and in thousand-fold cases works back to direct economics 
in increased efficiency and higher productive power. 'This 
right of freedom must include the right to limit that freedom 
by contract. Otherwise society could not go on. One there- 
fore might use his freedom to contract himself into slavery j 
accordingly a suicidal principle.' However agreeable such acts 
as voluntary slavery were to ancient legislators from Moses 
downward, moderns, at least some of them, have forbidden this 
slavery by contract. Whatever other reasons for this may hold, 
one ground at least is efficiency of production is lessened by 
slavery. On the average the free man produces much more 
and better products with much less waste of time, tools, and 
raw materials. The crude plundering of the slaveholder yields 
to the subtler maneuvers of superior brains. Slavery open and 
brutal is played out in our civilization. It has been dispossessed 
by other economics. 

'This freedom to contract away freedom renews the old dis- 
pute about social compacts which we may dismiss here. But 
if freedom was ambiguous in reference tO' personal relations, 
the difficulty is increased when we come to freedom to appro- 
priate the materials means of life.' This of course is nothing 
but economics. 'The right of property, personal and national, 
in movables and immovables, — the red Indians thought they 



ETHICS AND FX'ONOMIC DETERMINISM 331 

owned the soil over which they hunted ; quite falsely, according 
to some, who affirm that "hunting tribes have no moral right 
to property in the soil over which they hunt." ' Morality 
therefore varies according as you possess or not. The same 
dispute at bottom between Britain and Boer caused the Boer 
war. With the property right goes the right of inheritance. 
But when you consider the manifold systems of inheritance, it 
is clear that when you speak of freedom in these matters as if 
it were something sprung from the high heaven of pure ab- 
stract reason you are simply Hving in dreamland. There is no 
consistency in the word as concerns human beings as such, 
A survey of history and actual relations shows cnat the word 
varies in range of meaning in accordance with circumstances. 

Tf indeed freedom from restraint is to be as large as pos- 
sible, then clearly this freedom would be more fully realized if 
appropriation were not permitted at all. If answer be made 
that freedom means facility and security of gratification of 
desires, and that this is not possible without appropriation, 
then this freedom is not and can not be equally distributed. 
A man born without inheritance into such a society is much 
less free than if there were no appropriation. True he is free 
to walk along the road, to snifif the fragrant air, to drink the 
water in the street or sometimes from the river, — that is, if he 
can somehow get to adult stage — but what is it all worth?' 

The brilliant economist Bastiat answers this by saying that 
the man is still in a better position, because by exchanging his 
labor for money he can secure more than he would have done, 
had he faced the world as another primitive Adam. This 
answer however shifts ground ; it concedes the loss of freedom, 
but offers a compensation ; which of course in hard times, 
panics, and so on, is lessened more and more. Thus it is clear 
that this freedom-basis of Justice commits suicide, and leads 
to the position that the mass of mankind have neither freedom 
nor justice.' And all this upon strictly economic grounds. 

Sidgwick next passes to Justice expressed in the proposition, 
"Men ought to be rewarded in proportion to their deserts." 
After all the foregoing it will be sufficient for the present pur- 



332 ETHICS AND ECONOMICS 

pose merely to note that Sidgwick illustrates the position 
solely by economic examples, namely: profits divided no pre- 
vious arrangement having been made ; property as the ex- 
clusive right to the product of one's own labor; compensation 
for labor on property previously appropriated by another; ap- 
propriation by stretching the right of discovery, with denial of 
any rights of native inhabitants. 

Further in this matter of merit or desert, Sidgwick finds 
'Fitness to enter both as regards the distribution of instru- 
ments and functions and (to some extent at least) of other 
sources of happiness. Thus the tools to him that can use them, 
the functions to those who can perform them best, the means 
of enjoyment to those that can enjoy. Here however desert 
and fitness may come into conflict, utilitarian consideration 
must hold the balance.' 

Now in all this one is plainly concerned with the economic 
category of efficiency in concrete relations. Any merely ab- 
stract formula must inevitably lead to evident antimonies, 
Sidgwick concludes this paragraph with, — "Perhaps virtue is 
its own reward — at any rate man nmst only try to reward 
services in proportion to their utility." This again leads him 
to discuss the comparative value of different services. He takes 
us through nothing but economic categories, — value in all its 
forms, a fair and proper price, present customary values, handi- 
craft values, market values, limited supply values, psychic 
values, and so on. This again leads to the discussion of in- 
dividualistic and socialistic ideals, concepts which to-day rest 
upon nothing ii not upon economics. 

Finally he comes to Criminal or Punitive Justice. There is 
no need to dwell upon this after all the foregoing. Its con- 
nection with economics is manifest. Sheep-, cattle-, or horse- 
stealing is a mortal crime in pastoral communities. Forgery 
or counterfeiting is relentlessly pursued in a banking country. 
The savagery of ancient law has been softened because a better 
and cheaper result was got by mildness and by changing the 
conditions. The criminal aspect of Justice is Punishment. 
An eye for an eye, a tooth for a tooth, the lex talionis which 



ETHICS AND ECONOMIC DETERMINISM 333 

ruled in Khammurabi's code, 2250 years B. C. and in the 
Mosaic Code, 1500 — 800 B. C. The criminal code has varied 
with economic and social changes. At first perhaps it was 
purely personal self-defense of members of the presavage 
horde; then under gentile or kinship systems before the in- 
dividual was wholly freed from the social bonds of family or 
class, a loss or injury to one plainly affected the whole group, 
and that loss was equalized by a like loss from the offending 
class. The public lex talionis passed over into a personal lex 
talionis. In Khammurabi's code if a bad contractor by the 
fall of one of his buildings killed son or daughter of another 
man, the contractor's son or daughter forfeited life in ex- 
change. The like permeates the Mosaic code. And similar 
ideas are found in China to-day ; at least one can easily pur- 
chase a mortal substitute. As time went on, money and other 
compensations were found. To-day Criminal Justice is no 
longer punitive, it is in theory only deterrent or reforming. 
Punitive Justice is abandoned to theologians and to the Deity. 
Production purposes as well as economy of social pursuit of 
criminals are utilitarian grounds for abandoning the idea of 
Punitive Justice. So far as Reparative or Compensatory 
Justice is concerned, the interpretation is solely through eco- 
nomic categories. 

ECONOMICS AND THE OTHER VIRTUES 

After this rather long discussion of Justice, only illusions to 
the economics in the other virtues need be given. 

Benevolence. — The maxim of benevolence may be put — ^love 
your neighbor; or, do your fellow-man all the good you can. 
As an abstract general proposition you have heard this so 
often that it seems an immediate truth. Like many other such 
so-called truths it is straightway forgotten both in theory and 
in practice. As soon as you ask what is meant by loving your 
neighbor, or by doing good, you get away from the sweetly 
sounding abstract generality into the thick of concrete economic 
relations. The attitude of love in dealing with crimes and 
criminals or in religious contests, you find hard to preserve. 



334 ETHICS AND ECONOMICS 

"Who is my neij^hbor"? means the whole evolution from 
tribal and national animosities arising in part from opposed 
economic interests, the preservation of the tribe or nation in 
pursuit of economic welfare, through extended and developed 
trade and commercial relations, to the thought that any man 
is my fellow. The developed economics of world-trade changes 
the range of benevolence from the small tribe, to which every 
stranger was a foe, to the possibility that every stranger mav 
be an aid to the furtherance of welfare. And if you ask what 
good is, and what limitations are to be placed upon real prac- 
tice, you find that the matter turns almost wholly upon direct 
or indirect economics ; that is to say, it is interpretable into 
terms having a distinct economic bearing. 

This is not saying that love, benevolence, sympathy are im- 
mediately and directly the pursuit of wealth. A lover does not 
equate a kiss to five hundred dollars or even five dollars, 
though a legal decision may put a money value upon it. Nor 
does it say that the impulse to aid the injured or to^ ward off 
danger from a child is at the same moment the vision of so 
many dollars. Quite the contrary; one may be whoJH* blind 
to any and all such imm.ediate consequences for or against. 
Yet when one reflects upon such matters as a whole, and con- 
sidering their before and after, puts forth general recom- 
mendations concerning them, one is apt to seek, and moralists 
in fact do seek, justification in terms more or less economic. 
The practice of benevolence is held to be reasonable only when 
one gives due attention to limiting circumstances. According 
to the econom.ic organization of society whether pastoral, 
military, or industrial, and in accordance with the economic 
condition of the person, so is concrete benevolence to be prac- 
ticed. 

The "good will" however, need not change. Yet that "good 
will" is itself a product of biological evolution. Tribes and 
peoples not practicing this mutual aid adequately have not 
survived. Benevolence, doing good to one's fellows, is a con- 
dition of tribal and racial survival T.iis for the most part 
means longer-headed pursuit of welfare — call it happiness. 



ETHICS AND ECONOMIC DETERMINISM 335 

call it self-realization, call it duty — it means at the same time 
the use and the development of better and better means of the 
production and distribution of material goods. Exalt culture, 
the mind, the spiritual as high as you will, on this earth rmn 
simply can not get forward from culture stage to culture si"age 
except by steady increase in production, quantity and quality; 
that is, improvement in tools, implemeiits, and organization in 
pursuit of material goods. The conditions of the acquisition 
of these goods mold directly or indirectly every manifesta- 
tion of human excellence. Like considerations apply to truth 
and good faith. For example the entire system of financial 
credit rests upon and drives to the development of these vir- 
tues. The same of temperance and its increasing importance in 
productive spheres, or courage, and of chastity ; changes in th^i 
content and the significance of these virtues run parallel more 
or less with economic changes. 

SOUECE-BOOKS FOR ECONOMIC DETERMINISM 

In a way somewhat similar to the above, the thorough stu- 
dent will go through collections of sociological facts and 
ethical treatises. In Spencer's "Ethics" are recorded thou- 
sands of facts showing the difference inevitable between the 
ethics of militancy and that of industrialism ; Spencer's "abso- 
lute ethics" is simply transfigured industrialism plus bourgeois 
individualism. Or, going to the other extreme, trace economic 
implications in Greene's metaphvsical theological "Prole- 
gomena to Ethics," and see how often and how strongly eco- 
nomics is the hidden driver of the development. Greene can not 
vitally represent the self-realization of the soul in God except 
through movements and relations which are essentially eco- 
nomic. Best for this purpose however is Westermarck's 
enormous collection. Westermarck will establish, not the eco- 
nomic foundations of ethics, but a psychologic theory. So far 
his course is in the main eminently satisfactory. The economic 
determinist will find dissatisfaction largely in two ways : (a) 
Westermarck more or less frequently appears to treat psycho- 
logical hypotheses or schemata as representing completely in- 



336 ETHICS AND ECONOMICS 

dependent entities, instead of being what they actually are, 
fractional, often very fragmentary, elements of concrete 
phenomena. The more developed the economic status, the 
more numerous an! intricate these psychological efiflorescences 
become. Thus he entangles the reader in a network of con- 
flicting ideas, which are seemingly transcripts of real hfe, but 
which as taken are after all largely unreal fictions, (b) He 
does not often enough inquire into the causes which drive to 
the development of that "progressive civilization," of the very 
psychology, on which he would found his ethics. In this re- 
spect he closely resembles the psychological economists, 
Boehm-Bawerk, Fisher, Fetter, and others whose problems 
and conclusions move within an established psychology, with- 
out questioning the origin and the flexibility of that psychic 
substructure. 

Making due allowance and insistently demanding the causes 
beneath the psychological explanations, the critical reader will 
find that Westermarck's pages almost without exception fairly 
bristle with facts which altogether make his book a demon- 
stration of economic determinism as regards ethics. For 
example, his chapter on "The Origin and Development of 
Altruistic Sentiment": — Here Westermarck traces altruism — 
for many the bottom foundation of all ethics — back to external 
circumstances: natural selection — failure to show regard for 
others means the easier conquest of that race by the objective 
necessities of a continuous individual and racial existence; 
external relations and physiological stimuli leading to more 
prolonged associations, whence could emerge gregariousness 
and hence that sympathy which is so essential to moral con- 
cepts. "* * * the tribe arose as a result of increasing 
food-supply, allowing the formation of larger communities, 
combined with the advantages which under such circumstances 
accrued from a gregarious life." (Vol. II., p. 195) "No indi- 
vidual is born with filial love. * * * when a richer food- 
supply favored the formation of larger communities, fihal at- 
tachment must have been of advantage to the race." (II., 
194) "* * * even now there are rude savages who live 



ETHICS AND ECONOMIC DETERMINISM 337 

rather in separate families than in tribes ; and that their sohtary 
life is due to want of sufficient food is obvious from several 
facts which I have stated in full in another place." (11. , 195) 
Westermarck next traces the influence of economic conditions 
on the hunting, the fishing, the pastoral, and the agricultural 
stages of human culture ; the power of "local proximity," that 
is, the objective conditions of race maintenance, as dominating 
ideas of kinship; then his pages indicate that totemism, magic 
and religious superstitions are likewise products of longer- 
and longer-run ideas of individual and social welfare controlled 
at bottom by economic considerations. Next that the forma- 
tion of states either by internal growth or by conquests of war 
results fundamentally from economic conditions direct and in- 
direct. 'Just as the boomerang in a country plentifully pro- 
vided with a food-supply permitted a marked social develop- 
ment to the AustraHan aborigines,' (II., 300), so "arms and 
the man" make tribal conquests possible, tribal exploitations, 
tribal fusions, and the like. "In mankind altruism has been 
narrowed by social isolation, by differences in race, language, 
habits, and customs, by enmity and suspicion. But increased 
intercourse has gradually led to conditions favorable to its 
expansion." (II., 228.) That is to say ; the relatively permanent 
material bases of the pursuit of economic goods, namely, nat- 
ural resources, population, tools and instruments, determine a 
corresponding mass psychology, which of course largely con- 
trols individuals old and new within that society. Similarly 
throughout Westermarck's book if the reader steadily demand 
to see the conditions of racial survival in the struggle for ex- 
istence, and the driving causes below the psychological ex- 
planations given by Westermarck, he will find a huge body of 
facts constituting a full proof of economic determinism. 

HOW ECONOMICS BECOME ETHICS 

Space does not permit to trace out here how in primitive 
societies many customs and hence ethical ideas may have 
grown out of instinctive motor impulses — the useful surviving 
by natural selection ; how individual and social consciousness 



338 ETHICS AND ECONOMICS 

were rather the result than the cause of institutional phenom- 
ena. All this would be indispensable in a complete investiga- 
tion of the problem. Suffice here that man in our civilization 
has become highly self-conscious. This developed self-con- 
sciousness introduces a significant factor into ethical evolution. 
It thus becomes possible to show clearly, though here in out- 
line only, how in our day the changing economic gets itself 
transfigured into ethics, how it passes from external conse- 
quences into internal motives and ideals. 

An answer to the problem may be put briefly as follows: A 
passion-laden, concentrated, abstracting reason makes through 
the aid of changed instruments and social organization a long- 
range mass conquest of some existing emotionally held con- 
cepts of personal and national good, that is, a change is 
wrought in the content of existing ideals. Since the ideals can 
change only in part and gradually, these changed concepts 
inherit a portion of the preceding emotions gathered about 
them. And besides this, they take on the passions evoked 
by the contest; that is, they remain suffused with emotion. A 
final willing acceptance of the new as a guiding principle of 
personal and national good constitutes the new ethical ap- 
preciation, in short, the new ethics. Next to examine this 
proposition with at least a little care. 

Of course in one sense the primary fact of all human ethics 
and economics is conscious reason, the power of seeing rela- 
tions, of foreseeing consequences, and of acting upon this in- 
sight and foresight. Man has been defined as the tool-using 
animal ; better said, he is a tool-making animal. Now no tool, 
implement, or machine ever invented or improved itself. Each 
step in the evolution of the steam engine represents human 
imagination, seeing new relations, foreseeing consequences, 
and acting upon these sights. Civilization is in one sense a 
product of brain power. Art, science, practical knowledge are 
the crown and glory of the human intellect. Every forward 
step, be the drivers what they may, has either been foreseen 
however dimly and shortly, or if the first step were the result 
of mere chance, the outcome of habit, the stroke of pressing 



ETHICS AND ECONOMIC DETERMINISM 339 

necessity, brain of such quality was at hand to grasp some new 
possibility brought to light in the changed circumstances. 

Not that a clear analytical foresight and a definite purpose 
or intention lay at the foundation, or a broad social view of 
consequences to be realized. Rather perhaps a dim forefeel- 
ing, a vague haphazard unintended experimentation, or emo- 
tional outburst, a motor impulse, the pressure of conflictmg 
habits or needs; this in the individual, and an equally vague 
unintentional imitation on the part of others. Or natural 
selection would weed out more or less those failing to strike 
into more suitable arrangements. So that at first social and 
economic evolution were remote from conscious intention ; 
to-day, on the other hand, in some respects our society tends 
strongly to approach deliberate purposefulness. On another 
side, no less certain is it that the thinker, the inventor, the 
initiator can not far outrun his contemporaries. He himself 
is a product of the culture of his time and is bound or straight- 
ened by the social stage in which he lives. You could have no 
Beethoven among the Tartars, no Newton among the Fuegians. 
As a rule inventions or discoveries have occurred to more 
persons than one. Further the new invention must find a 
suitable environment. It must fall in with social tendencies 
and be appropriable by an important element of the inventor's 
society; otherwise it goes into oblivion. It can hardly be 
doubted that often, very often new possibilities were foreseen 
which were not then realized because the time was not yet ripe. 
Thus multiple ribbon-looms were known two centuries btrore 
they came into general use ; they were more or less suppressed 
for a long tim.e, because the handicraft methods and instru- 
ments, rather the economic power in the handicrafts, sought 
to stifle the invention. The like occurs to-day. Thus then the 
mind of the inventor must find a suitable soil in which to root 
his invention. The same is true of all sorts of ideas in what- 
ever fields. The mind initiates, but it is bound both before and 
after. 

The changes referred to spring from the mind's pov/er of 
concentrated abstraction. However brought about and what- 



340 ETHICS AND ECONOMICS 

ever the driving influence, the mind has acquired the power oi 
concentrating its attention upon a fixed area. It may be that 
the attention is steadied by material parts as in watching the 
interlocking movements of a more or less complex machine, 
or there are diagrams for the geometrician, or business pos- 
sibilities for the mercantile man. Be that as it may, other 
interests are for a time more or less shut out. The observer 
is more or less absorbed in a more or less narrow field; the 
engineer in watching, listening to, examining his working ma-, 
chine; the artist in laying on his colors; the musician in se- 
curing musical values. For moments these men are dead to all 
ordinary outside influences ; interest, whether from inspirational 
flash or from intensive brooding, fastens their vision, makes it 
almost microscopic; they perceive and feel relations among 
their objects, not felt, or but dimly, by others. Hence too rela- 
tions wholly new or suggestions of unrealized possibilities arise 
before their minds. The new thought may be an illusion or it 
may represent a real relation. At all events the result mani- 
fests a concentrated attention, however momentary, a power 
of abstraction, an exercise of reason whether intended or un- 
intended. Put it somehow to the test of trial, and it turns out 
to be real or to be an illusion. This process is substantially 
the same in all lines. Art, science, practice, sociology, theol- 
ogy, or what not, — concentrated attention, abstraction from 
interests and lelations external to the immediate field, and in 
that field a minute and often a steadfast observation, — ^this in 
broad strokes is the general procedure in mental advance. It 
is precisely in this way in part that economics gets transfigured 
into ethics. 

It is to be observed that in every culture stage of which 
there is any knowledge, the field of experience is already 
mapped out into various divisions or compartments, all created 
more or less by this concentration of the abstracting reason. 
The ethical field is there in more or less fullness : family rela- 
tions of some sorts ; rules or customs about property, that is, 
the material supports of life; rules of combat; the medicine 
man and religious functionaries: in all societies from the 



ETHICS AND ECONOMIC DETERMINISM 341 

savage up to the highest rehg^on and culture of to-day, a right 
and a wrong are recognized, and respect for the same is in 
some way enforced. In the oldest book in the world, from 
Egypt some 6000 to 6500 years ago, Ptah-hotep, one will read 
sentences which are in essence precisely what one reads and 
hears again and again to-day. Khammurabi, 2250 B. C, shows 
legal and ethical principles, whose like are in force this very 
day over millions of square miles. The pastoral code of Moses 
passing to that of settled commerciaHsm, agriculturalism, in- 
dustrialism, shows the same. And as said, when one looks at 
their content, one finds them dominated by economics. Hence 
it is nothing mysterious or exceptional that changing econom- 
ics should show a changing ethics. The stock terms are old. 
The content is new. Aristotle 2200 years agO' taught justice, 
veracity, courage, temperance. So did Ptah-hotep in Egypt 
6000 years ago; Khammurabi in Babylonia 4000 years ago; 
and Moses ; and the Vedic writers in India. The terms are not 
new. But the content is unlike that of other cultures, other 
economics. Thus slavery, chastity, truthfulness, temperance, 
courage all change. The names remain the same because each 
stands for something steadfast but expressing differing views 
of tribal, social, or individual good or welfare. 

That the content in each age is not unemotionally held is 
seen written for example all over the imprecations and the 
blessings in the Mosaic legislation. One reads the same in 
old Assyrian and Babylonian literature. Ptah-hotep of old 
Egypt tells the same, — not to mention ancient Greece, China, 
India. It is perfectly of a piece with the emotions and judg- 
ments of to-day. Let the trusts strike too hard, or a financial 
panic press the means of subsistence too closely — everybody 
knows the dumb and the vituperative rage which seeks redress 
and vengeance. One invokes the whole vocabulary of right 
and wrong. The case was exactly the same in Egypt 6000 
years ago. Khammurabi 2000 years younger differs from 
Ptah-hotep. Moses eight to fifteen hundred years after Kham- 
murabi is crude compared with the Babylonian sage. Cen- 
turies afterwards Greece and Rome ran throusfh their transi- 



342 ETHICS AND ECONOMICS 

tions from gentilism to Rome's giant legislation. Rome fell 
and the Germanic invader gradually changed his own decayed 
or decaying gentilism for Roman ideas, but only after centuries 
of struggle. To repeat, the names are old, the content is ever 
changing. The names represent ideals of personal and social 
welfare, in mass the pursuit of economic goods. As the pursuit 
changes, ideals, which are after all only such abstract general- 
ities concerning the good as are fashioned by a concentrated 
emotionalized reason, change with equal steps. 

The foregoing leads to a remark or two about good and 
about reason. These words are of course highly ambiguous, 
and this ambiguitv blurs emotional outlines also. The good 
may be either physical, sensuous, intellectual, aesthetic, indi- 
vidual or social, moral or immoral. It may concern itself with 
means, with processes, or with ends, with this world, or with 
the next world, and in all cases it may be short-run or long- 
run, transient or permanent. One can not here spend a great 
time in discussing the millenium-old problem of what con- 
stitutes the good, or the supreme good. There are volumes 
and volumes upon the subject. For the most part as an 
ethical and religious topic, the matter has turned upon abstract 
generalities. Whether as with the theologians the supreme 
good be obedience to the will of God, or be the "beatific vi- 
sion" of the Romanist, or whether with certain intuitionists 
moral goodness is a specific quahty of actions quite apart from 
their results, or whether it be a realization of all the poten- 
tialities of the self, or a state of happiness for the race or for 
the individual as such, it makes not much difference for the 
purpose here. Because when one compares the various 
schemes, one finds that they all have in common as their 
dominant content a long-run idea in place of a short-run. 
Even distinctions in kind are recommended on this ground; 
temperance is preferable to intemperance at least for the rea- 
son that generally and on the average one can have a greater 
mass of enjoyment, satisfaction, development, and self-realiza- 
tion in the long run, from being temperate than from being 
intemperate. Besides, as one steps down from abstractions 



ETHICS AjSD economic DETERMINISM 343 

and passes to concrete reality, one finds a rather extraordinary 
agreement among all schools. And when further one examines 
wherein the agreement consists, one finds himself dealing with 
direct and indirect economics. One may be as abstract as a 
Kant who makes morality to be the willing acceptance of a law 
having universal application — and this certainly is a good test 
where properly understood — but Kant can not make this sys- 
tem move one step apart from economic considerations. 

So far as the pursuit of material good is essential to life, to 
progress in culture, to self-realization, this much at least of 
economics is not opposed to the ethical ; rather here the two 
are strictly identical. No wonder then if this fact of agreement 
should lead to an extension of the sphere of identity, or that 
the emotions said to be appropriate to the one are transferred 
to the other. As a matter of fact the ethical covering has been 
and is extended over the economics. 

The dominant ethical is in fact largely the long-range eco- 
nomic as conceived by a reason which looks far ahead taking 
into account remote and indirect developments and creations. 
Reason varies in its power to see and to foresee. However 
dull and weak it may be, it must have developed since the 
separation of man from the brute. Then, besides, actual lite 
and social experimentation work out results wholly un- 
anticipated by the thinker. These then are also a matter for 
reason to analyze, and to ascertain causal elements, and to 
adjust the calculations or instincts or intuitions anew. To a 
reason at one state of strength rules and rights are appropriate, 
which are not so to a reason at another stage of development. 
Hence conflicts between opposing views, hence evolving eco- 
nomics and evolving ethics. 

Here then we have the conditions whereby the external 
economic passes into internal motives and ideals, in short be- 
come transfigured into ethics. An inventor or initiator in- 
tensely interested in a more or less contracted field of con- 
sideration thinks he discerns new relations and foresees higher 
results, a greater or more economical production, or a better 
distribution. He preaches it or practices it, if he can. He 



344 ETHICS AND ECONOMICS 

shows that, other conditions substantially unchanged, he can 
get fuller results ; he and those interested with him proclaim the 
new way to be better, more productive, more desirable, more 
reasonable, and therefore right. They also proclaim it the 
duty of society to put the new process through. It opens up 
new possibilities, it increases the resources of the tribe or the 
nation, the public welfare is enhanced, and the public con- 
science which knows itself demands the advance. Then th{^ 
whole vocabulary of ethics, of ideals, of spirituality, fills the 
air. On the ether hand the new must more or less dislocate 
the old. The holders of the old see their position threatened; 
they do not or can not readjust themselves to the new. Many 
are unwilling to try, for they are expert in the old rules, they 
fear their adaptability to the new. The skill of the old archer 
can not be transformed to the management of the new blunder- 
buss. The handicraft man is appalled at his danger from an 
automatic machine which renders his handiwork skill a super- 
fluity. Thus a contest between the old and the new emerges, 
which calls into play every emotion and desire of the heart. 
Heaven and earth are dragged for reasons pro and con. 
Every possible string is played upon, gain, greed, the rights of 
man, the blessings of freedom, national virtue and glory, family 
stability, the decay of religion — nothing is left untouched. 

In constitutional countries every election campaign manifests 
the process. The question may be local taxation, or the tariff, 
reciprocity, or the recall of the judges. Everywhere you per- 
ceive high and low playing upon the same emotional stops, 
in the name of patriotism, virtue, justice, honesty, truthfulness. 
All the while the question often concerns only an economic 
detail. 

Every reformer, social or otherwise, goes through the same 
experience. He sees his doctrine so narrowly and within his 
concentrated vision so clearly that he can see scarcely anything 
else. Thus every conquering cause clearly sees some new 
results. With proper resources, it marches on to victory — and 
to quite unexpected further results. Pitted against the new is 
the old, not less intense. The victory rests at the outset with 



ETHICS AND ECONOMIC DETERMINISM 345 

the side that has the greater economic power. Often enough 
there is need of an intellectual growth. The masses must catch 
up, or the old line must die out, while the new idea is refash- 
ioning the psychology of the rising generation. Natural selec- 
tion weeds out the old and thus establishes the new. This ac- 
complished, the transition is a settled fact, over the corpses of 
thousands who were either unable or unwilling to adapt them- 
selves. 

Has the ethical vocabulary changed ? Not at all ; the terms 
are still there ; the passions accumulated about them are still 
there. Only, the terms no longer mean just what they for- 
merly meant. A change in content has occurred. The or- 
ganized church usually at some distance from the firing line, 
and on the conservative side — orthodoxy is more "timid" than 
the timidest capitalist — takes up the new chant, and we again 
learn what we have so often learned before — "the world is at 
last coming to see God's real purpose." Yet often enough the 
question is at bottom only some economic change. 

It is through the representative power of the mind that 
efficient or external causes become transfigured into final 
causes or motives. The pressure of experience drives into 
consciousness the perception, say, of an external causal 
relation, the forces acting for and those against. An adequate 
representation of the relation so reproduces in the mind the 
external sequences and their correlated effects upon the body, 
that the motor impulses fairly tingle towards appropriate re- 
sponses. Amid suitable circumstances and in case of pre- 
pared minds, a signal as it were from real life renews 
the chain of associated representations ; a discharge takes 
place along the forefelt and prepared lines. Has the objective 
determinant lost its dominance in such a case of success- 
ful adaptation entering the realm of consciousness? In no 
wuse. As it were, the chain of external sequences has merely 
been illuminated by the light of consciousness, the chain re- 
mains unbroken. The external relation is the genuine thing; 
the representation is in a way its product. This priority 
manifests itself instantly at a failure to discharge aright; the 



346 ETHICS AND ECONOMICS 

person lands in the old difficult position ; the struggle to escape 
pressure is renewed ; the blind mechanical response to stimuli 
occurs as with the brutes, or short-run considerations govern 
as with the ignorant or the impulsive. It is therefore not the 
schematizations or abstractions of consciousness, nor the self- 
unfoldment of the immanent content of the purely psychic, 
which are the real drivers of mental and social evolution. 
Rather the motors are exterior forces and responses to them 
by the relatively flexible organism whxh supports or manifests 
consciousness. The elements of these abstract schematic 
drivers together with their emotional fringes are themselves 
registered products of these outer forces. In the main, re- 
adjustments mental and social merely place the organism 
more directly in the course, or under the influence, of the 
active powers. The external factors control the final result, 
precisely as the rules of the game determine the conclusion, if 
at any time the chess player rightly announces mate in five 
moves. The foresight of the end is not the cause. The rules 
of the game decide the situation. 

Passions and emotions are our drivers, — these rule our 
conscious lives. Often reason is only a servitor employed 
chiefly to minister to those desires. But reason is not wholly 
without force. Its function is to discover true relations 
among phenomena and to represent these relations adequately 
as determiners of the emotions and the will. Reason should 
rule — this means for the most part the substitution of long- 
range results for short-range consequences. This is true no 
matter what the ideal may be, — enduring enjoyments versus 
fleeting pleasures; a full many-sided realization over against 
a narrow self-realization, which lands only in a speedier col- 
lapse ; duty versus egoism ; the future life versus the present 
life. Emotions drive. — reason indicates some better lines of 
discharge. 

OTHER ETHICAL SYSTEMS 

It may serve to give more security to some in the con- 
tention that ethics are economic in mass effect, if one con- 



ETHICS AND ECONOMIC DETERMINISM 347 

sider for a moment the economic postulates or presuppo- 
sitions in some other conceptions of ethics. Now nothing can 
be more abstract than the ethics of the great German, Im- 
manuel Kant. Kant isolates pure reason completely from 
all sense experience. He cuts out wholly everything pertain- 
ing to emotion and sensibility. He conceives a kingdom not 
merel}^ of pure human reason as it w^ere, but of angels, or 
other purely rational existences. No passions, no desires, no 
wants, no physical or physiological necessities exist in his 
ethical realm. Of necessity no test remains for him but that 
of logical consistency. There is no real content to his ethics. 
For him conformity to the idea of law laid down by reason 
to itself constitutes morality. Any other motive whatsoever 
renders an act so far forth immoral. 

Now observe some assumptions at the bottom of this 
system. Kant presupposes continuity of existence in his 
realm, both as a fact and as a desire ; further he presupposes 
that no one in his kingdom of pure rationals has any power 
over any other one. Not only is each in that realm inde- 
pendent but also none can in any way determine or limit the 
existence of any other person. Within his realm there is 
no problem of food, clothing, and shelter, there are no eco- 
nomics at all. It will perhaps be truer to say that for real 
economics he posits a sort of spiritual economics, " Man doth 
not live by bread alone." Just as his ghostly formalism rests 
upon a fancied economic base, so real ethics are inseparable 
from real economic foundations. Naturally since Kant's 
rationals have no needs, he can easily scorn all conceptions 
of human earthly welfare, human happiness, human eco- 
nomics. Hence the repulsive character of Kantian ethics. 
Even the majority of ethical idealists break away from the 
Kantian representation. 

No less applicable are these remarks to the mystic, or to 
him who seeks " the beatific vision." He presupposes con- 
tinuity of existence, and an economic not known to exist. 
He places in another realm his welfare, his full satisfaction, 
his complete realization, his absorption in the Deity. His 



348 ETHICS AND ECONOMICS 

total economic presupposition is in one sense quite other than 
human economics. In another sense he represents the con- 
centrated abstracting reason in actual operation. In his de- 
mand for continued existence after death, he only rereads 
with greater abstractness and generality the earthly facts 
which as manifested are called the instinct of self-preserva- 
tion, without which his race had not endured to give him 
birth. His self-unfoldment, his complete satisfaction in the 
Deity, is only an abstract extension of the known driving 
powers in his struggle to maintain present physical life. 
Just because by abstract concentration on certain aspects of 
life, he has from the groundwork of his real constitution 
pushed his present demands and necessities into an unex- 
plored realm, he falls into the illusion of the relative non- 
entity of these demands. Thus he scorns considerations of 
to-day, denounces passions, desires, the demands of the 
present life. Apart from these demands and desires, he has 
not a solid spot from which to leap to his mystical absorption. 
Just as Kant, so the mystic plays with spectral abstrac- 
tion. And it is curious to observe how much of their ethics 
after all is but a ghostly reflection of actual life. For neither 
Kant nor the mystic can give one glimmer of movement, 
progress, or content, to his ethical ideas, but by lapsing 
back for a moment into real life with those passions which 
are known as real only when manifested in a human sen- 
sitive body tied to physical and physiological necessities. 
The fact that their ethics play only upon an unreal economic 
ought to imply that real economics are driving powers in 
real ethics. 

Entirely similar is the case of duty as " the voice of God 
within us." It is easy in a way to understand the origin of 
this concept both as a historical and as a psychological fact. 
It is accordingly easy to understand why the " voice " de- 
livers such varying dicta from age to age, from culture to 
culture. It is simply that the conditions of survival, that is, 
the modes of production and distribution, are different. 
A mass psychology in conformity with the varying con- 



ETHICS AND ECONOMIC DETERMINISM 349 

ditions of existence is generated. This folk psychology re- 
flects and expresses these conditions. But wholly apart from 
these considerations, when one examines the content of these 
dicta, one finds the old familiar economic elements clothed in 
a various language. " The voice of God " in one age defends 
slavery. And in slave psychology, the patois of slavery gives 
back the very soul of the enslaver's language. " The voice 
of God " can institute inquisitions, can establish tribal bar- 
riers, create the exclusiveness and superb vanity of a " chosen 
people," can make the vices of patriotism into cardinal virtues, 
can in fact generate, or rather express all sorts of ideals in 
which for the moment this or that people or its dominant 
class finds its present salvation. When the conditions of 
salvation change, the " voice " comes lagging after — at least 
as organized in religious sects or national church bodies. 

A look behind the veil, or a reduction of the abstract for- 
mulas to concrete cases shows universal economic necessities 
realizing themselves under changed conditions. The instinct 
of self-, class-, and race-preservation in the grip of material 
necessities realizing its ends with various, varied, and vary- 
ing means wreaks itself outward and onward. The social 
usages and customs conditioning the struggles of the indi- 
vidual bend and alter according to a shifting center of equi- 
librium. Every section of society is both cause and result, 
is condition and conditioned. Amid all the change, two re- 
lations remain as immovable, invariable presuppositions — 
the instinct to live, and the necessity of the means to live. 
Abolish the instinct and the means are non-significant. 
Abolish connection with the means, and no matter how great, 
how enormous the demands and desires, life perishes. There- 
fore it is that Kantian ethics with its kingdom of pure 
rationals without physical needs, passions, or desires be- 
comes a travesty. Likewise mysticism, whether it seek ab- 
sorption in the divine essence or content itself merely with 
adoration of the " beatific vision," has power only with 
peculiarly constituted minds. " The voice of God," unless it 
speak the language of reality, however transfigured the 



350 ETHICS AND ECONOMICS 

concept, is as the voice of one crying in the wilderness, the 
voice remains a mere voice, 

ECONOMIC DETERMINISM AND OTHER MODES OF 
CONSCIOUSNESS 

Next to anticipate the most vigorous criticism that will be 
brought against the foregoing representation. This criticism 
will assert that all consideration of the independence of sci- 
ence, music, painting, architecture, the dance, the drama, 
literature and art in general, religion, a thousand and one 
notions and inspirers is left out, is reduced to zero. These, 
it will be asserted, are original and independent powers in 
human life. And if these, then also ethics; hence perhaps 
the representation above should be reversed, namely, that 
ethics determine economics, instead of economics determin- 
ing ethics. Now one must concede immediately that all 
these things are more or less original forces which also de- 
termine economics from some points of view, yet the original 
position that the economic is the indestructible groundwork 
of them all must be maintained. They each gain a relative 
independence, but they never get free from the economic, 
and as mass phenomena they largely represent the product 
of economic forces. The whole is a question of complex or 
circular causation, a phenomenon is at once effect and cause. 
This fact is what makes the dispute interminable and so 
elusive and plausible on both sides. 

First then the origin and the development of these so- 
called non-economic independent spheres and motives are 
clear so far, namely, in some sense, art in its various forms, 
science, religion, and so on, are powers, latencies of the 
human organism, rather perhaps of organic beings in gen- 
eral. This precisely in the same sense as the qualities of water 
are somehow latent in the hydrogen and the oxygen which 
chemically unite to form water. In one way we do not under- 
stand this chemical fact at all ; we push a principle of con- 
tinuity into the phenomena and think we explain the matter 
more clearly. In another way we understand it completely, 



ETHICS AND ECONOMIC DETERMINISM 351 

namely, in the sense that with unfailing regularity we count 
upon the recurrence of the chemical phenomenon under ap- 
propriate conditions. In exactly the same way we expect 
regularly the recurrence of certain vital and physiological 
phenomena under appropriate conditions. Hence given the 
human form we expect response to light, to sound waves, to 
pressure, to heat and so on. We expect hunger, thirst, pain, 
the sex impulse, the whole intricate complex which makes up 
the normal man. Mind and body are indivisible; we never 
find mind separated from body; as the body grows, the mind 
grows ; when the body weakens and decays, the mental man- 
ifestations weaken and decay. When the body dissolves the 
mental manifestations cease. So far as known, a Kantian 
" pure reason " other than an abstraction is an impossibility. 
Accordingly believe what one will about the future, it is past 
dispute that in this life bodily demands, bodily necessities of 
food, clothing, and shelter, these are fundamental. Their 
pursuit is the pursuit of the economic. The higher aims must 
rest upon these. So far forth economics determine every 
manifestation of human intelligence. This is indubitable. 
If faith as of a grain of mustard seed could move mountains, 
the faith seems rather scanty, for mountains appear to be 
rather steadfastly fixed objects. 

Now already something of the work of the concentrated 
abstracting reason, or intellect has been seen. This, ap- 
plied to the various life expressions, is conceivably that which 
develops in part these relatively independent motives, en- 
ergies, or exercises. One does not here spell reason with a 
capital, and try to make it out to be that " pure reason " 
monster of Kant or Hegel. The history of human culture 
from savage through barbarian up to the mind of a New- 
ton, Kant, Beethoven, da Vinci, Shakespeare, Edison, or 
Clerk-Maxwell forbids such. Everwhere reason is im- 
mersed in sense, in passion, in physical needs. A new in- 
sight is often enough a mere reaction to a chance experience, 
or to blind unintended motor impulses. Somewhere and 
somehow the new insight supervenes just as water qualities 



352 ETHICS AND ECONOMICS 

emerge from the union of oxygen and hydrogen. In himself 
moreover every man sees and experiences such concentration 
of intellectual power. Each person can within certain limits 
shut out all extraneous ideas and hold fast to one mental 
object, even if it be no more than fashioning diagrams out 
of the fixed designs on a papered wall. He thus creates for 
a time relatively independent centers of regard. Some men 
have this power of concentration so strong that they are said 
to withstand even the tortures of the rack, as is told of Gior- 
dano Bruno. But the list of such men is very limited. Bruno 
could not out-think the stake at which he was burned. Still 
these centers of regard relatively independent are generated; 
within certain limits they have an indubitable power. One 
can become so enthralled with them as to neglect all direct 
personal economic welfare. One can be so taken up that 
one has the illusion that somehow the economic necessities 
are as nothing. The illusion may go so far as to dwarf or to 
kill the real physical economic as a mental representation. 
That is to say, as conscious motives in the field of mental 
representations, life itself apart from a certain set of valued 
ideas, ends, or motives is regarded as worthless. Hence the 
roll of martyrs for any and all causes is immense in length 
Still however long this roll may be, as one traces it down the 
ages, it 3'et represents only a small fraction of humanity. It 
shows only sporadic cases, it does not show mass phenomena. 
In manifold instances, the persons are immersed in earthly 
economics, or in numberless others as in religious martyr- 
doms, they represent a transfigured economic whose center of 
gravity as it were is placed in the other world. The roll there- 
fore does not represent a pure disengagement from the eco- 
nomic, except in but few cases. If one pass from these im- 
mensely infrequent cases to the overwhelming majority oi 
religious believers, then if one can show these independent 
centers to consist in the main of economic variations, that is, of 
indirect economics, the thesis will receive additional support. 
Music for example. Music presupposes a development 
of ner\'ous tissue, of sense organs, and of material instru- 



ETHICS AND ECONOMIC DETERMINISM 353 

ments. It bottoms on physiology. That hearing with all its 
delicacy of discrimination is so highly evolved must mean 
that it has directly and indirectly aided in the struggle for 
existence individual and social. One can see immediate ad- 
vantages of an acute discrimination of hearing. Not less 
advantageous must it have been in social relations, — the court- 
ing song of birds for example. The struggle for individual 
and social preservation in combination with the rhythmic 
processes of nature is reflected or reproduced in the sen- 
sitiveness of nerve structure. Rh3^thm and hence music is 
imbedded in the nervous tissue. For the individual it is an 
intrinsic endowment and is thus a relatively independent 
center. Passing over its biological aspect, in birds for ex- 
ample — where it is very highly developed, explained in part 
at least is an instinct of the individual either subservient 
especially to sexual selection, or expressive of abounding 
vitality and thus conducive to racial welfare — and turning 
to man, we see this faculty quickly bent to economic pur- 
poses. 

One definition of the economic is the pursuit of objects and 
services which satisfy human desire. Instantly then from 
this definition music rests upon economics. In this broader 
sense economics is more than the pursuit of food, clothing, 
and shelter. Music as the satisfaction of a certain aesthetic 
sense is not commonl}- thought of in the economic terms. 
But whenever regarded as a service for the satisfaction of the 
aesthetic faculties of others, it is largely economic. So far 
as we think of music as cultivated or practised merely for the 
gratification of the musical sense, we think of it in non-eco- 
nomic terms. So far as we think of it as cultivated and used 
for extraneous purposes, it unavoidably takes on an aspect 
more or less economic. Even the first case can have eco- 
nomic connections. Thus music in religious ceremonies may 
be dominantly for the purpose of inducing or again of ex- 
pressing certain feelings not immediately economic. But also 
behind this religious expression, this same motive may on 
the part of others be mixed with a purpose to preserve relig- 



354 ETHICS AND ECONOMICS 

ious power and influence. As a mass phenomenon, eccle- 
siastical power is necessarily combined with economic con- 
sequences and causes. 

The musical service rendered in religious organizations, is 
it or is it not accompanied by pay? Is it or is it not followed 
by the majority of the performers as a means of subsistence? 
Our professional players, and composers, do they or do they 
not on the whole seek thereby subsistence as well as glory 
and other indirect economic utilities? No doubt at all, that 
out of the original functions, the instruments, and their laws 
the concentrated abstracting intellect can create distinct 
problems to Avhose solution it may devote itself intensely, 
even to the exclusion of all other considerations. The listener 
may give himself up unreservedly to the appreciation of the 
performance. This exclusive abstract sectioning of the phe- 
nomenon may be for many purposes altogether admirable 
and by some it may be thought to be the only pure treatment 
of the musical faculty. But it no more represents the total 
reality in the matter than the physiologist can finally discuss 
digestion apart from circulation, from breathing, from nerve 
action, from muscle and bones. Mere digestion is an ab- 
straction. The rest of the body is not simply a questionable 
negative sine qua 7ion, — \i such distinction between sine qua non 
and cause is thinkable, — it is also a positive determiner 
of digestion. Similarly with music and the economic. The 
cultivation and the development of the musical faculty pre- 
suppose material instruments, recording instruments and 
various media. Apart from these material means no stage of 
musical culture once attained could be maintained and passed 
onward into the succeeding generation. Without the pre- 
vious training given through instruments, Beethoven be- 
come deaf could have written no sonatas nor symphonies, nor 
apart from the piano could Chopin have evolved his subtle 
transitions and marvelous emotional outpourings. Without 
metallurgists and other artisans, Wagner could never have 
produced such orchestral efTects, nor could others set out to 
invent as it were new sounds and new combinations. Indeed 



ETHICS AND ECONOMIC DETERMINISM 355 

an entire book might be written to show the intimate de- 
pendence of musical development upon instruments and media 
of notation. But all this progress involves a wealth of ob- 
jective economics. 

Besides this, music as a mass phenomenon presupposes a 
certain average of production. The musician as such does 
not spend his time wholly in direct economic pursuits. He 
must have a certain leisure for practice and study. Hence 
our musicians as a body represent a class, not producers of 
material goods, who yet must have these material necessities. 
Given a certain average of production, then the musician 
must find in some acceptable manner a method to secure a 
portion of the product. Can any one doubt that the bulk of 
our professional music represents a native function turned 
to economic uses? Do and did the great musical composers 
find no economics entering into their hopes, fears, and cal- 
culations? The matter seems relatively clear. Abstractly 
considered music represents a faculty which may be regarded 
separately from direct economics. The abstracting concen- 
trated reason may work up special problems and their so- 
lutions within the arbitrarily limited range. A step back to 
the complex real shows that the driver of the development of 
this faculty is found in economic considerations. Let the 
average production of material goods fall off, and the musical 
profession suffers a great shrinkage. What music would be 
apart from professionals or quasi-professionals with corre- 
sponding material instruments may be guessed at from the 
persistency of folklore tales. Mothers would croon as they 
have done for ages their lullabies of solace ; the songs of play- 
time, of relaxation in festal gatherings, would continue much 
as with the barbarian tribes. But an art and a science of 
music would be unknown. Developed music presupposes a 
aeveloped economic status. It springs from this status and 
reacts upon it. As a mass phenomenon it is turned to eco- 
nomic purposes. Its driver is not merely aesthetic pleasure 
but aesthetic pleasure pursued for economic ends also. It does 
not cease to be music, even if it be interfused with economics. 



356 ETHICS AND ECONOMICS 

Like considerations apply to painting, to sculpture, to archi- 
tecture, to all the aesthetic arts. That the practical arts are 
dominated by economics is implied in the very name, prac- 
tical arts. Even science itself with its cold, clear light is per- 
vaded by the same spirit. Certain parts of physics are dead 
or sluggish because there is " no business " in them. Elec- 
tricity jumps forward with giant bounds because it is filled 
with business. Chemists seem dominated by the demand for 
business possibilities. Multitudinous problems are set for 
them because certain processes are desired in order to meet 
this or that economic demand. Witness almost any paper 
on chemistry. Of course there are always some systema- 
tizers, thinkers, abstract generalizers at work upon data — 
seeking, as they say, truth for its own sake. Granted of 
course. And it is to be hoped that they get beforehand a 
tolerable economic status and reward plus their glory and 
their satisfaction in dealing with high abstractions. But 
these men are not the mass phenomena, and even their high de- 
votion is glorified, because experience has also taught that 
every advance in knowledge and power contributes finally 
to improved economic welfare. 

Religious beliefs themselves, which in their highest flights 
and deepest emotional stretches assume for the passionate de- 
votee so profound a sacredness, are as a mass phenomenon 
inextricably intertwined with present and future economics. 
With savage and barbarous tribes the deities are powers 
chiefly hostile and destructive ; the main idea of their relig- 
ious conduct and ceremonial is to ward off evil from self 
and tribe. Often enough ancestors and notable chiefs are 
deified, and aid or comfort is sought from them as being- 
blood relatives or powerful agents. The early Vedic hymns 
and such literary fragments as are gathered from various 
savage and barbarous tribes show that religion is conceived 
as a ceremonial largely to further the economic welfare of 
the individual, family or clan, the tribe or the race. The 
Jewish Old Testament is earmarked throughout with the 
same idea. Constantly the cultivation of the religious cere- 



ETHICS AND ECONOMIC DETERMINISM 357 

monial is recommended because of results in this life, " the 
land shall flow with milk and honey," or this or that national 
plague or disaster is a divine chastisement. Our " Lord's 
Prayer " has for its heart " give us this day our daily bread." 
Our yearly thanksgiving proclamations invariably in son- 
orous phrases voice the reference to economic welfare. Have 
it as you will, either the economic knows how to bend relig- 
ion to its purpose, or ecclesiasticism knows how to assimi- 
late to its own views the imperious demands of continued 
earthly life. In either case the permanent influence of the 
economic in this matter is transparent, openly and naively 
in crude and barbarous religions, subtly and obliquely in the 
refined abstractions of to-day. 

It is far from the purpose here to deny the enormous power 
of religious belief in human life in all its relations. In no 
field has the concentrated abstracting power of human in- 
tellect and emotion shown itself more intense. " The zeal 
of thine house hath eaten me up." Apparently, religious be- 
lief and economics are often poles asunder. None the less 
does the economic drive itself through every religious cult. 
" The laborer is worthy of his hire." The short-range eco- 
nomic is not the long-range. The causation is both near and 
remote. Persistent influences work steadily onward. Often 
their mere persistency is a temptation to overlook them com- 
pletely. It is so with the economic in religious disguises. 

Even with the individual the pervasiveness of this force is 
illustrated again and again. For instance a Jew in Russia is 
a case where a religious belief is held in apparent defiance of 
immediate economic interests. And yet, considering this 
Jew's social relations, the surroundings within which he must 
continue to live, the ostracism visited upon the apostate, the 
contempt for the renegade felt and expressed in manifold 
cases by his religious persecutors, considering the present 
economic status grown from a past economic status, he may 
find that after all his best economic hope lies in comforming 
with his ancestral faith. So that his religion constitutes his 
best economic stay, and his economic hope confirms his relig- 



358 ETHICS AND ECONOMICS 

ious ties. Add to this the myriad-fold influences of his 
earthly training, the emotional religious awe of earlier days, 
the sympathy pointed and concentrated by common sufferings 
from persecuting hands, the fears, anxieties, groanings, tears, 
and wrestlings with God by his parents and co-religionists in 
many cases in the past, the hopes, beliefs, tragic and glorious 
histories, the exaltations and ecstacies preached into him by 
father, mother, teacher, rabbi — all these, sprung from a 
psychology born and nourished from a certain economic soil, 
generate in him a corresponding psychology wherein the 
present economic is colored with a Joseph's coat of many 
colors. 

If he be one of those with strong emotions, a native and 
powerful concentrated abstracting intellect, the present eco- 
nomic may become relatively insignificant. He will trans- 
form his earthly economics into celestial presuppositions. He 
will sacrifice this life for a future hope. His abstracting 
emotionalized intellect has shifted his center of gravity. The 
end of economic pursuit is the gaining and the maintenance 
of an agreeable state of consciousness, however the word 
agreeable may be interpreted. No ethical or religious system 
conceives an eternal chasm between virtuous conduct and 
happiness as an agreeable state of consciousness. The pious 
Jew or other believer takes only what is to him the long- 
range view of the end of the economic pursuit. His attitude 
represents not a contradiction of the economic but only the 
contradiction of the ordinary rather narrow view of eco- 
nomics. It may perhaps be said to be the limiting case on 
one side as that of the sated materialist is the limiting case on 
the other. In such cases, the desire of this life is gone, and 
with it the force of the ordinary economic motive. 

Such cases however do not represent the mass phenomena 
of religious beliefs and cults in relation to the economic. As 
seen, among savage and barbarous tribes the economic stands 
out clearly. The Old Testament covenant apart from ritual 
is clearly the social and personal economics suited to and 
coming from a shepherd tribe passing into agriculturalists 



ETHICS AND ECONOMIC DETERMINISM 359 

and commercial traders. In Khammurabi's code ecclesiastical 
powers exercise large economic powers. Similarly in ancient 
Egypt. And then down the entire history, one finds the like 
interlacing. In Egypt thousands of years ago recurred the 
problem, the absorption by the church of the land and wealth 
of all kinds. Often for long centuries priestly power was real 
because of the economic power behind it. Time and time 
again the civil power has had forcibly to expropriate the 
clerical power ; the state was in danger of becoming wholly 
subordinate to the ecclesiastics. This contest repeats itself 
from age to age. The church whether Egyptian, Babylonian, 
Hindu or Roman has always had an omnivorous maw for 
the goods of this world. One sees the contest to-day in 
France, Portugal, and Spain, with the church of Rome. The 
history of the Roman Catholic church from Constantine to 
the present day is the record of one long contest for political 
and religious power through the acquisition of economic 
power. Through every vein and artery throbs with stead}^ 
insistence as the lifeblood of this organization, ' preserve 
religion and society by preserving the political and the eco- 
nomic power of the church.' Select minds of great abstract- 
ing ability, such as thousands of divines of this church and 
of other churches have been, can easily discover the essen- 
tial identity of spiritual aspiration in all grades of religious 
culture, can elaborate systems seemingly wholly removed 
from earthly economics, but the practical theorizers and ad- 
ministrators never fail to recognize a similar essential identity 
of economic aspiration, and to base the airy constructions on 
more metallic soil. Witness also such manuals as that of 
Brother Louis of Poissy, apostolically blessed by the Pope, 
which combines with superb dexterity theological assump- 
tions, m.etaphysical postulates, and flexible empirical prin- 
ciples, all to maintain the concrete power and precedence of 
the Roman hierarchy. There are no waters so troubled as to 
discourage the ecclesiastic from fishing. There are no wind- 
ings of policy which the church can not readily turn. There 
is nothing strange, nothing unreasonable in all this because 



360 ETHICS AND ECONOMICS 

there is no situation into which the economic can not and does 
not penetrate. Hence the grip of the economic is strictly 
inevitable. The only incongruous thing in the whole matter 
is the zephyr quality of the abstract self-assuring professions, 
and the earthly, temporal, flexible character of the concrete 
practice and result. Without doubt the religious and the 
ethical stage of culture at any one moment are relatively in- 
dependent causal elements in the immediately^ following eco- 
nomic movement. But that religious stage is itself a product 
of previous forces, the dominant one of which was the eco- 
nomic. Hence it still remains a truth that this religious 
stage represents at least a part-product of economic deter- 
minism. 

Just as the infinitely complex bodily organism permits in 
individual cases million-fold deviations from normal lines, 
which deviations nevertheless are either cancelled by the ex- 
tinction of the vagrants, or are brought into fairly regular 
courses by the constant pressure of biological forces and 
necessities ; so religious feelings and beliefs wander over de- 
vious paths, but in the main they are pressed into consonance 
with prevailing economic concepts and processes. They do 
not cease to have a kind of efflorescing independence, but they 
likewise never fail to come back to the primal demands. It 
is simply impossible that it be otherwise for any length of 
time, because congruence with the conditions of existence is 
the indispensable precondition of continuance in existence. 

MEANS AND END^ 

Ordinarily, ethical discussions and treatises deal with wide 
generalities. They handle such themes as the supreme good, 
essential virtues, happiness, egoism, altruism, self-realiza- 
tion, the " beatific vision " and so on. Thinkers derive from 
speculative treatment of certain phases of experience various 
conclusions, which they then postulate as a priori presup- 
positions. Supported on these aerial pinions, these thinkers 
will traverse with diagrammatic exactness and complete cer- 
titude infinity and eternity, and they show such a sureness 



ETHICS AND ECONOMIC DETERMINISM 361 

of knowledge of even minute details of the mind and the pur- 
poses of the Deity, that a mere scientist however mathematical 
can only wonder that there yet remain any problems for the 
human mind to solve. But at bottom it is simply the char- 
acteristic clerical and metaphysical trick of translating 
(often unconsciously no doubt) real aftersight into a pretended 
foresight, and of assuming that to deal with the words in- 
finity, eternity, divine and the like yields a knowledge of 
corresponding worth, infinite, eternal, divine. It is a curious 
commentary upon these soaring efforts to note historically 
how constantly these " final " interpretations of the divine plan 
are subject to revision. But whether the ethical discussion 
assume to determine the final destiny and end of man, or 
concern itself with only this life, the ordinary treatise says 
but little about the means ; it deals mostly with the end, hap- 
piness, self-realization, virtue as such, the realization of the 
will of the Deity, and so on. To-day on the other hand much 
more will be implied as regards the means towards these 
ends. 

Ends, be it observed, are of various degrees of remoteness. 
A man may believe it desirable to increase the prosperity of 
his country. He may think protection or socialism would 
tend to accomplish this result. He may therefore set out 
to achieve protection or socialism. To this subordinate end 
he may think it the suitable thing to change the national 
legislature ; and to this end again he may deem it necessary 
to institute propaganda work of some kind; to this end again 
he may seek for money, pamphlets and so on. In every case 
here are ends to be realized, and in every one of them means 
are implied. In his view one of the means to get national 
prosperity is to have men and women work under certain 
prescribed conditions. The human beings under such con- 
ditions are the means. The legislature is the means to secure 
the conditions. Propagandists and converted voters are means 
to secure the legislature. Money, pamphlets, and so on, 
are further means to secure propagandists and voters. And 
so on in a most variegated way. Thus there are ends more 



362 ETHICS AND ECONOMICS 

or less remote with their corresponding means. It is perfectly 
well known that the immediate though subordinate end may 
for many purposes exclusively occupy the mind for a time; 
it may even completely usurp the place of vantage, as does 
money with the miser. Like substitutions occur with ref- 
erence to economics and ethics. Just as the protectionist 
or the miser may come to think that national, or personal 
welfare is identical with his peculiar desires, so this or 
that ethical debater may conceive the ultimate or final good 
of men to be identical with a particular set of ideas. This 
confusion of possible ends is one cause of ethical disputes. 

In all cases the acceptance of the end implies the acceptance 
of the means. On the other hand the nature and character of 
the means has determining power regarding the ends. Hence 
economics and abstract ethics are inextricably intertwined. 
Economic ends and means are less remote than the ultimate 
ends of abstract ethics. Economic ends and means are proxi- 
mate ends and means of ethics. Since the end can not be 
achieved without the means, the obtaining of these means be- 
comes itself an essential proximate end, that is, in general we 
must pursue economic goods. No less certainly do the means 
determine the end. Ends proposed for which no means exist 
are outside of ethics and practical affairs ; they are mere 
academic fancies. It were senseless to discuss the ethics of 
our relations with the inhabitants of Mars. Corresponding 
to this change in the nature of the means and their possible 
coordination, is the change in the possible ends to be re- 
alized. Hence a change in production, technique, or organiza- 
tion implies change in ethical possibilities. 

Since the vast majority of mankind possesses no economic 
means, the first ethical requirement of them is to get such 
economic goods. In all truth for the multitude there is little 
or no distinction between economics and ethics. The nearer 
their struggle is to that for mere existence, the less can their 
economics be distinguished from their ethics. It is thus 
evident that, for the majority, economics can as little be cut 
out of ethics as can food from life. With every change in 



ETHICS AND ECONOMIC DETERMINISM 363 

tools, technique and organization of economic means begins 
a change in the practical ethics of the vast majority of man- 
kind. The remote abstract end may remain unchanged. The 
real concrete relations are shifting as the banks of a living 
stream. 

IDEALS 

No doubt with some there is grave dissatisfaction with the 
views just expressed. Some are perhaps saying: — "How 
brutal, how low, all ideality of life stripped off, spirituality 
dead, life reduced to a bread and butter demand. All the 
amenities, all the graciousness, all the poetry, the ambitions, 
the splendor of the human intellect, of human virtue, of 
human self-sacrifice, consumed in the charnel house of body, 
of physical existence, of passions which we have in common 
with the brute.'' Nor will these protestors be quite con- 
tent if it be replied, however gently, that this protest is after 
all simply a manifestation of that abstracting emotional in- 
tellect, which sees too narrowly only one aspect of the matter. 
Widen the view. See a more concrete object on which to 
spend the high emotion. The vigor of the protest might in 
some cases measure the possibility of an equally high endeavor 
towards more palpable results. 

For in answer to the protest it may be said : — (a) In no 
way have worthful ideals been attacked. The criticism, de- 
structive as it may seem, has touched solely excesses of 
idealism. An idealism such as Kant's, which scorns the ne- 
cessities whereb)'' we have any knowable life appears to be 
an abstraction become an excrescence, a noxious growth 
causing a malformation of the living being. If ethics are to 
be real, vital, practical, one must get out of dreamland into 
actual life. The ideals should be workable, not fantastic de- 
mands which utterly neglect the concrete circumstances 
wherein the ethics are to be practiced. 

An ideal suited to a being devoid of human needs can never 
be appropriate to a struggle in which millions are constantly 
or often below the level of proper food, clothing, and shelter. 



364 ETHICS AND ECONOMICS 

The idealism that scorns physical and physiological neces- 
sities, that with an afflatus of spiritual pride assumes to find 
food and drink, flesh and blood and bone, the indispensable 
labors of life-maintenance, the unavoidable secretory and ex- 
cretory processes of living nature, to be essentially vile and 
debasing, instead of seeing them to be what they really are, 
namely, as divine as anything can be, — for this idealism there 
is no longer any use. 

The aesthetic idealism that confounds and condemns alike 
the squalid monstrous slums and the magnificent skyscrapers 
of modern civilization, that confounds alike the temporary 
sweat and grime with the needless vulgarity of the burly 
workers about the colossal furnaces and mills of steel, and 
prefers Watteau court shepherds and shepherdesses living an 
impossible life in a Ruskin atmosphere of fantastic Arcadia ; 
an aestheticism which largely devotes itself to phrase-making 
with bits of emotionalism, as if these mere points of experience 
were the whole or the most of life, seems too minutely frac- 
tional for full respect ; it leads only to distorted and relatively- 
degenerate views of human life and human worth. 

The political and social idealism of a Plato or an Aristotle — 
these are merely instances of what recurs decade after decade 
down the long line of the centuries — flowering out upon the 
groundwork of a slave society, and despising the labor and 
the subject mentality, without which these idealists could not 
actually live, and which they themselves, by teaching, by 
preaching, and by applying social physical force, ceaselessly 
re-create, we frankly deride, just as we deride the correlate 
servility and philistinism, at once effect and cause of such 
idealism. 

An idealism of morality that, like Wordsworth's "Ode to 
Duty," commingles theology, physical science, biological in- 
dividual and social instincts, sensation and reason, law and 
freedom, all in a vague quasi self-existing ideal, which how- 
ever points only to realizing a kind of contentment with self; 
in short, a moral ideal which merely voices undefined and 
often undefinable aspirations after I-know-not-what seems 



ETHICS AND EXONOMIC DETERMINISM 365 

too much " the counters of wise men " become " the coin of 
fools." 

Nor is there much greater use for an idealism that inverts 
the relative importance of the duties of to-day as compared 
with those of a future life, while it throws soporifics to the 
betrayed and the despoiled, and creates such a crouching 
deference and contemptible self-seeking for the future world, 
as to lead to a quietistic resignation and acceptance of ex- 
isting causes of social exploitation and degeneracy, as if 
these were drill-master training methods of the benign ruler 
of the universe. 

In sum, so far as these partial idealisms are merely reflexes 
— and they are largel)'^ so — of an equally partial philistinisni, 
which they live on, regenerate, and yet decry, they are quite 
as contemptible as philistinism itself. 

(b) How easy would it be to read this story in a reverse 
direction. One could easily take the view of man emerging 
from the brute, from savagery, from barbarism; it were easy 
to picture man's growth in intelligence, in ideality, in the 
purification of his ideal. One could easily sing a dithyramb, 
or could easily lull into torpid security with the refrain that 
" economics are becoming more and more a mere incident " 
instead of being as always heretofore a brutal necessity. 
Thus one could easily forget nine-tenths of the efforts of nine- 
tenths of present humanity, and make real ethics appear to be 
solely the ethics and the spirituality of that small fraction 
which seemingly are untrammelled by economic needs. But 
these lucky few can perform their feats of self-satisfying- ab- 
straction only because a crowd of toilers carry them upon 
their heaving, sweaty backs. It were easy to sing a paean 
to the power of the mind — a paean too, which should ex- 
press real truth. The world has an abundance of such paeans. 
Just for that reason it is perhaps well occasionally to indicate 
excesses in the representation. 

(c) Is there not left enough life for spirituality to find room 
for employment? Is there no place for high ambition, for poetry, 
for heroic self-devotion, for self-realization, and self-sacrifice 



366 ETHICS AND ECONOMICS 

in that nine-tenths of the efforts of nine-tenths of humanity! 
Bread and butter existence versus the amenities, the gracious- 
ness, the exaltations of a spiritual life — is there no room for 
endeavor to diffuse these amenities, this graciousness, this 
spiritual exaltation among the nine-tenths? Not as the slave- 
master diffuses physical welfare among his slaves, and all the 
while carefully inculcates slave psychology. No, nothing like 
this. Not that charity which ignobles both giver and receiver. 
Not that complacency, that efflux of unconscious pride and 
vanity which causes the giver to imagine himself free from 
necessities, and which condemns receiver into beggar, parasite, 
underling, and mental slave. Do not fear that you are de- 
prived of fighting ground for your whole armory of spirit- 
uality, culture, and amenities. Spread them abroad with a 
full hand. — How? Why, by generating a society in which 
economics, while never on this earth ceasing to deal with 
primary requisites, shall yet cease to be that war of each 
against all which brutalizes by tyranny and slavery. In this 
one sphere there is room for all the ideality that any reformer 
can muster up. Cease from the tale of pious resignation. 
Cease from that sluggishness of reason which makes the Deity 
the cause of woe. Cease to preach that the slavery, the degra- 
dation, the untoward lot of the poor is the mysterious decree 
of a benevolent providence. Cease from pietistic fatalism. 
Abolish slave psychology. Recognize that social relations 
result from the interaction of material and mental forces. 

Accordingly there is no lack of room for any one to cherish, 
to develop, and to carry out an ideal to the full. The only 
question is what ideal to cherish and to develop. Look around 
you. You see what life is or may be. For a healthful per- 
son with an abundance of means, the world is truly a pleasant 
place. If you can shut your eyes to the misery round about 
you, if you sear your conscience, that is, blunt your sym- 
pathy to such a degree as to say — " It is not my fault, I can 
not help it, I am not my brother's keeper " — then indeed you 
with an abundance of means have the key to all earthly 
happiness. The world with all its magnificent beauties and 



ETHICS AND ECONOMIC DETERMINISM 367 

grandeurs is before you. For you Yosemites, Himalayes. 
the towering mountains with their abrupt precipices, huge 
shoulders and massive buttresses may roll on and up beyond 
the clouds. From vantage points you may view the world. 
Or you may seek the wildness of the forest, you may traverse 
the Amazon, that wonderful tropical forest semi-continental 
in magnitude. Or there is the sea with all its power and 
grandeur, its magic and its mystery. There are the polar 
regions, and the kingdoms of the air. Or again there is 
science, art, religion, social labor. Or still again there are 
the pleasures which may come to your so-called lower senses. 
With means at hand all lie open to you. Nature, art, and 
lower humanity with its necessities and slave psychology, 
all will minister to you with flowing hands. Truely for the 
wealthy the world may be a pleasant place. But for the 
great multitude it is first a Gethsemane and then a Golgotha, 
tears of blood and unfulfilled desires of the spirit and then a 
crucifixion upon the wheels of physical necessities and social 
regulations. 

For the nine-tenths of humanity the only helpful creed is 
social solidarity. The gospel of undiluted individualism has 
had its day. It has for the masses of mankind nothing much 
above disguised slavery. Social solidarity, class conscious- 
ness, these are the words. You hear much preaching against 
this class consciousness. But such is the weakness of men as 
individuals, that for the propertyless worker, class union seems 
his only resource. Social regulations to-day are dominated 
by property ideas. The main force of our law is to guard 
property, not to conserve or to develop the individual man. 
Almost automatically the law is against the propertyless for 
the property holder. Accordingly only by conscious recognition 
of their weakness when alone, of their strength when united, 
can the workers of the world determine their own destinies. 
This class consciousness means simply, — that society should 
be so organized that the genuine workers should come into 
the full product of their labor, that the idlers and the parasites 
should be shut out, that utility should be the basis of pro- 



368 ETHICS AND ECONOMICS 

duction, and that culture and refinement should be within the 
reach of all. So understood, this creed contains all the pos- 
sibilities that any reformer or revolutionary can rationally 
desire. Until it be exhausted, one needs not complain of the 
flatness or spiritual deadness of life. 

Solve the economic problem in the way of extending and 
deepening- the flow of the waters of the present life. There is 
enough and more than enough to do in this line. Care for 
the other life is but a shallowness, a lazy flight into the in- 
accessible. The simple proposition is, fashion your ideal 
aright. Plant your flag in this world. Here is where the 
misery, the pain, and the struggle are actually known to exist. 
Let your religion, 3^our art, your culture, your science, your 
ethics recognize this as the real fact. Clean up this spot. 
The future world may be cared for when you reach its portal. 
Let your religion and culture drive to the spiritualization of 
this earthly realm. Heaven may collect what inhabitants it 
can. It does not concern you. The center of gravity for you 
and for your ethics is this present little earth. 

DEFINITIONS OF ETHICS AND ECONOMIC DETERMINISM 

Perhaps this entire discussion might profitably end by in- 
dicating more clearly what ethics and economic determinism 
are conceived or defined here to be. By ethics is meant first 
those acts, usages, and customs, personal and social, which 
tend to the health and the preservation of the social and 
national life. The customs are objective and the consequences 
are the ultimate tests. Personal ethics are significant so far 
as the individual is necessary for the tribe or nation. So- 
ciety raises its ethics so far as it extends, widens, and deepens 
individual and social life. Ethics again from being ex- 
ternal become internal by training and education. Society is 
interested in having its members accept willingly its social 
rules. Hence a person's inner character is in a sense more 
important than mere conformity with external rules. If a 
person willingly identifies himself with social requirements, 
that is, voluntarily seeks the social good, he needs no social 



ETHICS AND ECONOMIC DETERMINISM 369 

constraint, Those who must have social force applied to 
them are foreign bodies in the political organism, they are 
in it but not of it. Hence jails and the gallows. Ethics be- 
come inward explains why with some the motive or the in- 
tention is taken as the essence of morality. A willing internal 
obedience is better than external constraint. From good in- 
tentions and motives, there results in the long run less harm 
than good. Society goes along more smoothly and economic- 
ally and is therefore interested in furthering this inwardness. 

But amid such conceptions of ethics as these, room can no 
longer be found for " absolutes " of any kind regarded as real 
things. One should no longer put forth such a commixture of 
the schematic and the real as ' a proportional division of an 
economic product among laborers, enterprizers and capitalists 
might with " absolute social justice " decree worse poverty 
than now exists.' (Prof. Carver; N. Y. Times, 3/24/13.) 
In the above we have the reappearance of another " pure 
science " schematic variant, which at bottom merely posits as 
a scientific test, a law so fashioned as to approximate the 
divisional returns which actually obtain in the present form 
of the concrete struggle. Hence an " absolute social justice " 
gets birth. We have already fully enough indicated on pp. 
77), 84, 87, 89, 212 and elsewhere the principles involved here ; 
a detail examination would yield only such conclusions as are 
found in Chapters III, IV, V. "Absolute social justice " — 
one must smile at such sv%^elling expressions. When a pro- 
fessional economist begins to talk of " absolute social justice," 
one is tempted from the long line of such bourgeois teachings 
to say, surely a dusky comicality is in his immediate neighbor- 
hood. 

For similar reasons again, ideal ethics are on the whole to 
be preferred to real ethics. In the long run it is much better 
for the welfare of race or nation that ideals be born, grow, 
and pass into realization ; progress lies in this direction, social 
stagnation and death in the other. But the ideal shall at no 
time lose sight of the primary demands of a spiritual life, 
namely, the satisfaction of physical needs here on this earth 



370 ETHICS AND ECONOMICS 

and access to the means and sources of culture. You would 
think from a Kant or a Greene or from religionists in general, 
that mind or spirit can continuously disregard or despise the 
bodily. And like a marginal utility economist, such writers 
revel in the exceptional moments and experiences of life, as if 
the pendulum could continue to swing and yet be forever at its 
maximum ascent. Or the spiritual philosopher will tell you 
that spiritual ethics presuppose the physical demands as 
satisfied or controlled in this life and disposed of in the next; 
whereas in actual fact you find them largely disposed of in 
this life for nine-tenths of humanity, and an equivalent Kant- 
wise presupposed for the next. It is precisely this severance 
of the schematic abstract from the real and the turning of it 
into a quasi independent entity, which have ever constituted 
the theoretical defense of every kind of established custom 
become at length an abuse — slavery, serfdom, caste systems, 
nobilities, exploitation of every sort. 

But in the long run, the long-run objective gets in its work. 
Hence too in the world-commerce of to-day, the extension of 
the ethical ideal to the entire human race. As the horde ex- 
panded into clan, into tribe, into nation, so now nation tends 
to expand into world-wide connections. Thus the inter- 
national character of commerce and industry has begotten the 
international solidarity of labor, at least in idea. Socialistic 
ethics represents the highest flight of concrete human ethics. 
Its class consciousness, however vague, presents an ideal 
whose realization, however remote, or as some think, however 
practically impossible, would be its own annihilation; that is, 
the word class in its present economic sense would be 
abolished; there would result the federation and solidarity of 
all humanity in giving to each and every individual co-op- 
erative aid for the realization of all human possibilities which 
tend to a heightened individual and social life. This it would 
accomplish by attending to the economic relations of man- 
kind. An ideal more genuine than this, which bases itself 
upon realities, not upon religious constructions which place 
the center of gravity of this life in another world, one can 



ETHICS AND ECONOMIC DETERMINISM 371 

hardly conceive, any more than one can conceive in construct- 
ing- a human habitation what purpose w^ould be served by 
referring- its structural center of gravity to that of the solar 
system, or still more to the center of gravity of the stellar 
universe. 

Similarly economic determinism does not mean merely the 
dominance of the direct money-motive, or the narrow con- 
ception of the production and distribution of material goods 
in the present decade in a small portion of the inhabited world. 
It does mean the dominance of the external and objective 
over the internal and subjective. Physics and physiology pre- 
cede psychology. Social evolution and hence psychological 
evolution rests upon material substructures. Just as words 
are the fortresses of mental conquests, and garrisons are 
needed to hold a conquered territory, so culture gains can be 
permanently held only through appropriate changes of ma- 
terial bases. One story of the building finished, as it were, 
— natural resources, the tools and implements, the population 
inner and outer being what they are — then in conformity 
therewith exists a social organization and psychology which 
seeks to exploit the surroundings to its own advantage. On this 
level of progress the infinitely complex possibilities of human 
nature get some sort of opportunity for expression; the variety 
is enormous, but as mass phenomena some possibilities are 
as incapable of existing as a Beethoven or a Wagner where 
no musical instruments exist; the instruments develop the 
musician quite as much as the musician develops the in- 
struments ; only through improved instruments and material 
means of recording can the musician achieve and secure a 
permanent advance. On the finished story an immense variety 
of forces play, constructing all sorts of pleasant compartments 
out of the supplies physical and spiritual which are at hand ; 
these are the arts, sciences, beliefs, dogmas and religions ap- 
propriate to the material progress. Occasionally a new im- 
plement or useful substance is found, or a new mode of 
organization which yields greater objective results, or a new 
external force physical or social bursts upon the busy place. 



VI ETHICS AND ECONOMICS 

Straightway begins a transformation ; the old compartments 
break down, new ones arise, or in place of the old structure 
another gradually shapes itself; the fresh material refits the 
old to itself or even casts it completely aside ; the old genera- 
tion or generations, whose psychology is not advanced enough 
or pliable enough to welcome the change, fight on under the 
time-honored banners, sound the customary magic-working 
war cries, but all in vain. The new tool creates its own 
psychology, its appropriate emotional calls and formulas. 
Natural selection weeds out the old and fits in the new. Ob- 
jective elements have conquered, and have molded social 
psychology in conformity with themselves. " The conversion 
of thermal energy into mechanical energy, first practically 
effected by the invention and perfection of the steam engine, 
has brought about in a single century more permanent change 
in the manner of living, and even in the habits of thought of 
the inhabitants of the world, than any combination of political, 
social, or personal influences could have effected. It is the 
mastery of man over nature, as represented by matter and 
energy, rather than that of one man over another, or of one 
race over another, to which histories give such exaggerated 
predominance, which underlies progress" (Soddy; "Matter 
and Energy," p. 240). 

To some, this use of the term " economic " may seem an 
undue extension of the word. It answers to the Marx-Engels' 
expression, " the materialistic conception of history," which 
term however is open to the objection that it too strongly 
conceals the relative independence and the initiative of the 
mental or physic factor in social evolution. This is not the place 
to attempt to evaluate accurately each factor of the complex 
objective antecedents — climate, natural fertility and re- 
sources, instruments, machines, processes, the derivative and 
reacting individual and racial psychology, social combinations 
and organizations. Suffice that though the general formula, 
"the objective dominates the subjective," may easily sink to 
the worth of a barren truism, the emphasis thrown upon the 
word " economic " indicates that social amelioration is to be 



ETHICS AND ECONOMIC DETERMINISM 373 

sought not in the preaching of merely abstract ethical and 
religious principles — usually derived from and reflecting an 
antiquated economic status and misapplied to the new con- 
ditions — but in putting power at the right point, namely, the 
material economic connections of the individual and of society. 
Change these, wait patiently on natural selection, and the de- 
sired result will surely follow ; or better said, use the reason 
that can foresee the eftects of nature's processes, and with 
clear intention further the inevitable outcome. 



INDEX 



Absolute ethics, 37, 42, 49, 54, 90; 
rights' illusion, 102; "social jus- 
tice," 369. 

"Abstinence," theory of interest, 
194. 

"Accumulated Labor," theory of in- 
terest, 197. 

Actual exchanges, 205. 

Addition, 299. 

Advance of capital, 116. 

Aherns, 26. 

"Alice in Wonderland," 36. 

Alternative uses of goods, 231. 

Altruism, 46, 53, 55, 336. 

Antiquity of man, 2. 

Approximation methods, 84. 

Apriorism, 245 flf; general reply to, 
247; ethical, impossible, 305; fail- 
ure of, 304. 

Aquinas, 47, 55. 

Aristotle, 54, 173, 364. 

Astronomy, 290, 295; three bodies, 
129. 

Austrian interest, 136 ff. 

Averages, 126. 

Axioms and postulates, 297. 

Barker, 104. 

Bastiat, 331. 

"Beatific vision," 347, 349. 

Beaulieu, 104 fif. 

Benevolence, 333. 

Bentham, 27. 

Bergson, 305. 

Blackstone, 25, 320. 

Boehm-Bawerk, 138 f?; 142 ff; 160 

fi"; 184. 
Boole, 303. 
Bossuet, 27. 



Bucher, 170. 

Caird, 307. 

Capital, advance of, 116; as eco- 
nomic category, 110; decay, 107; 
goods, 89; pure, 65, 89. 

Capitalism, as survival of fittest, 
119. 

Capitalist, 203, 213; function of 
pure, 113; not enterprizer, 120; 
illusions, 214 flf. 

Carver, 369. 

Causality, 292. 

Causation, economic, 70 fif; phys- 
ical, 74 flf. 

Cause of interest, 173; productive 
process, 172; pure time-prefer- 
ence, 176; psychological, 155; of 
wages, profit, interest, 183 fif. 

Causes of institutions, 152. 

Charity, 137, 333. 

Chastity, 335. 

Children, 167 flf. 

Clark, 60 fif; ethical problem of, 60; 
economic problem, 64; economic 
causation, 70, 78 ff; as economist, 
99; ethics relative, 130. 

Class consciousness, 48 ff; 367; 
struggle, 48 ff. 

Clifford, 258. 

Colonial wars, 17. 

Common man and moral legislation, 
270. 

Confusions: economic, 74 fif; phys- 
ical and social, 74; mathematical, 
77; psychological, 86; legal and 
real, 89; absolute ethics, 90; static 
state, 91; ethical, 99. 

Consistency, 292 ff. 



i 



INDEX 



Constitution, U. S., 16. 

Consumer's value, 229. 

Contract, 26, 324. 

Copernican astronomy, 290. 

Courage, 335. 

Cousin, 26. 

Create, 108. 

Creationism, 99 flf; not final, 202. 

"Creative Evolution," 305. 

Credit operations, 118. 

Critical principles, scientific, 29. 

"Critique of Political Economy," 10. 

"Critique of Pure Reason," 35, 282. 

"Critique of Practical Reason," 284. 

Culture and external resources, 

310 fif. 
Cyclic character of nature as cause, 

149. 

Declaration of Independence, 14. 
Deity, 32; Greek and Roman, 32; as 

ideal, 34 f¥. 
Dependable regularity, 292 S. 
Derived values, 237. 
Desert, 331. 

Displaced Labor, theory of inter- 
est, 194. 
Distribution, functional or group, 

123. 
"Distribution of Wealth," 60 fif. 
Divine guidance, theory of history, 

3; sanction is unscientific, 31 ff; 

and a soporific, 35. 
Duty: good will acts from, 253; is 

respect for law, 262; law of, is 

universal, 264. 



Economic causation, 70 f¥; 78 ft; 

confusions, 74. 
Economic determinism: 1 fi; and 

ethics, 310 fT; and music, 352; and 

other modes of consciousness, 

350 ff; and religion, 356; and 

science, 356; and socialism, 19; 

definition of, 10, 315, 370 ff; not ) Filial love, 336 

ii 



narrow economic, 21, 315; not an- 
ti-religious, 13, 28; source-books 
for, 13, 335. 

Economics of production, 27; how 
become ethics, 338 flf. 

Economists, muddled expressions 
of, 103. 

Economy, national exchange. 115. 

Egoism and altrusim, 46, 55. 

"Empire of right," 39 fif. 

Empiricism, 319. 

Encyclical on labor, 38, 105, 111. 

Engels, 13, 59. 

English Board of Trade report, 161. 

Enterprizer, 120, 142, 203, 211, 212; 
suicide of, 128. 

Equality, 201, 323. 

"Equals of equals," 298. 

Ethical purification, 123 ff; status of 
interest, 171, 187; other systems, 
307, 346. 

Ethics and economic determinism, 
310 ff; and food, clothing and 
shelter, 314; definitions of, 368; 
precivilized, 316 ff. 

Evolution, American industrial, 127. 

Exchange, actual, 205; schematic, 
204, 206; theories of interest, 204; 
general, older school, 204; Aus- 
trian, 206. 

Exclusive ownership, 201. 

Exploitation, 203, 208, 209, 218, 237; 
Fisher on, 180; replies to, "full 
pay," 209; marginal utility reply, 
217. 
Expropriation, 104. 



"Facts," 289. 

"Fairness," 88, 93, 97, 205, 212. 

Family development, 337. 

"Fancies," 223. 

Farm illustration, 68, 75. 

Fetter, 161, 162. 

Fichte, 26. 



INDEX 



"Finalities," 36 ff; 288, 307; relig- 
ious, 308. 

Fisher, 189 fif; 162 fif; 180. 184. 

Fitness, 332. 

Food, clothing, shelter, 312. 

Freedom, 329. 330; of will and 
morality, 281; God and immortal- 
ity, 287, 306. 

"Fructification," theory of interest, 
191. 

"Full pay," 209 ff. 

Geometry, 300. 

God, freedom and immortality. 285, 

306. 
Good will acts from duty, 253. 
Great men, theory of history, 9. 
Greene, 307, 335. 
Group distribution, 123. 

Habit as cause of interest, 149. 

Hamilton's report, 15. 

Hegel, 7. 

History, American: Constitution, 
16; Declaration of Independence. 
14; Hamilton's report, 15; recent, 
16; representative democracy, 17; 
Resolutions of 1787, 19; Revolu- 
tion, 16; slavery question, 15; 
Spanish-American war, 16. 

History answers Clark, 127; extent 
of records, 2; Magna Charta, 14; 
Jewish theocracy, 4; theories of, 
3; loan interest, 170. 

Hobbes, 26. 

Hyde, 38. 

Ideals, 21. 39, 133, 326, 363. 

Ideal states, 327. 

Illustration, farm, 68; industrial 

world, 69. 
Immortality, God, freedom, 285. 
Immutable truths, 36 flf; 292 fit. 
Imputationism. 99 ff; 130. 191 ft. 
Imputed values, 2.30. 



Income, qualities as cause of inter- 
est, 149. 

Individualism, 41, 220 ff. 

Independent producer, 68. 

Inheritances, 104. 

Institutional robbery, 61, 100, 107; 
test, 61, 108; and social spenders. 
114; and social stimulus, 115. 

Institutional, theory of history, 8. 

Interest, efficient cause of, 182 ff; 
in labor state, 122; is institutional 
robbery, 109; loan, history of, 
170; meanings of, 157; net, 142; 
question, 137 ff; rate and profit 
rate, 174; real, 189; theories of, 
older, 191 ff; exchange theories, 
149, 204; productivity theorv of. 
57 ff. 

"Intuition" useless, 35. 

Inverse problems, 67. 

Juristic concept of property, 25. 
Justice, 320 ff; "absolute social," 
369. 

Kant. 30, 35, 252 ff. 347; economic 

basis of, 251; personality, 245. 
Kelley, 161. 
Khammurabi, 321, 333, 341, 359. 

Labor, 27, 49, 116. 216; pure power, 
65; state, 120, 211, 234; values, 
233, 237. 

Landed aristocracy, 18. 

Laveleye, 25, 39. 

Law and government, 27, 49. 

"Laws of wages," 95, 237. 

Leo XIII, 38, 47. 98. 105. HI, 317. 
319. 

Lex talionis, 332. 

Life, absolute right of 44: insur- 
ance, 225. 

Locating margins, 69, 72, 91. 

Locke, 27. 

Lo<?ic, 36. .303. 



Ill 



INDEX 

Loria, 13. 

Louis of Poissy, 359. 
Love of offspring as cause of inter- 
est, 149. 
Luxuries, 223. 

Machine-made ethics, 102, 105. 

Magna Charta, 14. 

Malthus, 318. 

Man, antiquity, 2; cause of social 
evolution, 49 ff. 

Marginal utility: criticism of, 218; 
reply, 217. 

Margins, locating, 69, 72, 91. 

Marriage, 153. 

Marshall, 231, 315. 

Marx, 10, 19, 28, 59. 

Mathematics, 36, 297 ff. 

Matriarchy, 316, 318. 

"Matter and Energy," 372. 

Maynz, 27. 

Maxim of will, 260; is universal, 
264. 

Means and ends, 360. 

Metaphysic, transition to, 271, 290. 

"Methods of Ethics," 319 fif. 

Mill, 28. 

Mind, apart from body, 51, 247. 

Monopolies, 226. 

Monotony in labor state, 234. 

Moore, 95, 237. 

Morality and freedom, 275, 281; in- 
tra-tribal, extra-tribal, 269; legis- 
lation by common man, 270; prin- 
ciples of, 275; rests on maxim of 
will, 260. 

Moral law and psychology, 284, 306. 

Morris, 7. 

Mosaic code, 172, 188, 330, 333, 341, 
358. 

Muddled expressions of economists, 
103. 

Music, 352. 

Mystic, 347, 349. 

Natural law of distribution, Q6, 
100; necessities confused. 150; and 

iv 



marriage, 153; and private prop- 
erty, 153; rights, 26, 42, 102, 328; 
right of life, 44 ff. 

Necessity of capitalist, 90, 110 ff; 
116. 

Necessities and subjective values, 
232; confused, 150; immutable, 
36, 292 ff; legal and real, 89, 111, 
116; natural, 151. 

N. Y. Times, 161, 369. 

Objective versus subjective, 222 ff; 

312, 370 ff. 
"Occupation," 26, 48. 
"Ode to Duty," 364. 
Origin of ethical finalities, 288 ff. 

Patriotism, 318. 

Philippovich, 116. 

Philistinism, 364, 366. 

Plato, 54, 364. 

Poincare, 305. 

Porter, 307. 

Precivilized ethics, 316. 

Primitive law of distribution, 101; 
man and tool, 102. 

"Primitive Property," 25 ff. 

"Principles of Jurisprudence," 287. 

Problems, inverse, 67; pure science. 
73. 

Producer independent, 68. 

Production ruling consumption, 227. 

Productivity theories, 57, 74, 77. 

Profit rate and interest rate, 174. 

Progress and enterprizer, 211. 

"Prolegomena to Ethics," 336. 

Promises, Kant on, 266 ff; 279. 

Property, theories of. 25 ff ; stimulus 
to crime, 122. 

Prostitution, 169, 215. 

Provision for the future, 146, 160. 

Psychology in molding, 164, 167; in- 
dividualistic, 220 ff; of profit and 
interest, 185; negro, 162, 163; 
slave, 165, 214; cause of interest, 
155. 



Ptolemaic astronomy, 290. 
"Pure reason," 245 flf. 
Ptah-hotep, 341. 

Purification, ethical by abstractions, 
125; by mathematics, 126. 

Reason abstracting, 338 ff; pure, 

245 ff. 
Religion, 316; and economic deter- 
minism, 356. 
Religious finalities, 308; idealism, 

865. 
Representative democracy, 17. 
Report, English Board of Trade, 

161; Hamilton's, 15. 
Reservoir systems, 228. 
Resolutions of 1787, 19. 
Revelation of property, direct, 32; 

indirect, 33. 
Revolution, American, 16; English 

Industrial, 127. 
Robbery, institutional, 61, 107 ff. 
Rogers, 13. 
Roman Catholic church, 38, 54, 347, 

359; divines, 47, 172. 
Roscher, 28. 
Rousseau, 26. 



"Sacred books," 39. 

"Sacrifice," 323. 

Scales, 88, 93, 97, 161, 205, 212. 

Schemata, 36, 132, 134, 272, 289 ff: 
not real drivers, 346. 

Science and economic determinism, 
356; and finalities, 37; approxima- 
tion methods, 84; is economical, 
30; is of the real, 29; is predictive. 
31. 

"Science and Hypotheses," 305. 

Sciences are facts plus formulas. 
289. 

Scientific law of wages, 66. 

"Scientific Socialism" and economic 
determinism, 19. 

Shells, 38, 39. 



INDEX 

Sidgwick, 319 ff. 

Simons, 13. 

Slavery, 15, 18, 54, 98. 

Slave psychology, 165, 214. 

Smith, Adam, 27, 184. 

"Social contract," 26, 49. 

Social evolution, 13, 49, 337; labor 

state, 120, 234; self, 258, 264, 281, 

313; spenders test, 114; stimulus, 

115; tissue, 258. 
"Socially guaranteed," 199 ff. 
Socialism, 19, 54, 180; monotony of, 

234; refutations of, 236. 
Soddy, 372. 

Source-books for economic deter- 
minism, 13, 335. 
Space conceptual and perceptual, 

300 ff. 
Spanish-American war, 16. 
"Specific products," 71 ff; 77. 
Spencer, 258, 319. 
Stallo, 305. 
"Static State," 66, 91. 
Staples, 223. 
Stephens, 258. 
Steuart, 184. 
Storage systems, 228. 
Subjective versus objective, 222 ff; 

312, 370 ff; values and necessities, 

232. 
Substitution of similars, 231. 
Suicide, Kant on, 276 ff; of enter- 

prizer, 128. 
Taft, 92. 
Tariff, 18. 

Taussig, 161, 168, 170, 184, 221. 
Technical superiority of present 

goods, 147, 166. 
Temperance, 335, 342. 
Tennyson, 6. 

Tests, economic, 61, 99, 108, 114, 
115; of morality, effects, 99, 108, 
202, 261, 368; university of moral 
maxim, 264 ff; of reality, 30, 34; 
of science, 29 ff. 



INDEX 



Theories of history, 3; of interest, 
57, 149, 191, 204. 

Three bodies problem, 129. 

Time as cause, 154, 186, 207; prefer- 
ence, 143; pure time-preference. 
176. 

TranscendentaHsm, 319. 

Tribal self, 258. 

Truthfulness, 266 flf; 335. 

Ultra-individualism, 41, 220 ff. 
Underestimate of the future, 144, 

160. 
Unit, 299. 

Units, artithmetical and social, 77 S. 
"Use" theory of interest, 197. 
Uses, alternative of goods. 231. 

Value, foundation of, 143 ff; 217 fif: 

productive theory of, 77. 
Values consumer's, 229; derived, 

280; fad, 222; impersonal, 221; 



imputed, 230; labor, 283; market, 
221; normal, 221; objective, 225, 
233, 238; rationalized, 223; subjec- 
tive, 139 flf; rest on material and 
psychological necessities, 232. 
"Voice of God," 348, 349. 



66; 



198. 



Wages, "scientific law of,' 
scales, 88, 97, 161, 205, 212. 

"Waiting" theory of interest. 

War, 45. 

Westermarck, 319, 335 if. 

Will, good acts from duty, 253; free- 
dom of and morality, 281; maxim 
of is universal, 264; morality rests 
on maxim of, 260. 

Wills, 104. 

Wordsworth, 364. 

Work, 27, 49, 116. 

"World Almanac," 161, 223. 

World markets, 227, 229. 

Worlds, subjective and objectire, 
288. 



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